With the banking industry landscape growing ever so competitive, our modern world has witnessed a radical shift in many of its business models. Numerous retail banks are undergoing alterations to appease the standards of their clientele, which evolve at an overwhelming speed. The rise of Fin-Techs (non-banking startups) has significantly changed the landscape. Disruptive technologies have forced traditional businesses to thoroughly review their oversight. It is safe to say that the shifts are eminent, but their implementation into user behavior is a process that is likely to take time.
The year 2020 was not short of unique and unprecedented challenges for the banking industry either. The pandemic almost demanded the execution of a fully-virtual (mostly untested) banking model within a relatively short amount of time. While most proceedings ran with relative ease, there were some challenges along the way. These challenges, unfortunately, cannot be left in 2020. With this year coming to a close, here are some potential challenges retail banks might face in 2021:
Knowing the Modern Client
Above all, financial institutions need to acquire a comprehensive understanding of the wants and needs of their clientele. Engaging with clients is essential, as their turnover is highly dependent on their satisfaction. Additionally, the modern world provides clients with a myriad of ways to express their thoughts on products and services they encounter, creating a much more complex pool of feedback. Not to mention that “brand” loyalty as a concept is becoming volatile by the minute. One thing’s for certain, retail banking services need to be on guard for the “modern client”: someone whose characteristics differ vastly from that of their predecessors.
A continuous process of meeting customer expectations becomes trickier when working to fulfill the tech-savviest generation of them all. Modern clients are well-versed in technology and bring out a new, digitalized demand for the banking sector. With an abundance of technology at their fingertips, modern clients are bound to be more informed and therefore possess higher expectations.
Contrary to popular belief, this does not only refer to the younger generations. There’s a radical shift in the preference of handling everyday transactions digitally (as high as 60-85% according to Western European Markets), and it applies to people over 65 as well.
Walking with the Times
Technological advancements, in all their indispensable glory, are innate to most aspects of modern culture. We witness the world develop at an astounding speed, leaving us no choice but to follow. Numerous industries have embraced the innovative factor of technology, and the banking sector, predictably so, is not exempt.
In the highly competitive landscape, only the strongest retail companies can survive by delivering, monetizing, and growing their digital and mobile footprint. With manual proceedings deemed “a thing of the past”, business growth can only be ensured by modernizing technology, incorporating robotics, investing in workflow automation tools, and simply walking with the times.
Staying Ahead of Cyber Criminals
Retail banks are among the best-suited candidates for data breaches and cybercrime. By simply imagining the amount of sensitive data they carry, one can understand why retail banking services are like a candy store for a cyber-criminal.
In fact, history speaks for itself, with 819 financial firms being hit with a cyber attack in 2018, 140,000 Social Security numbers exposed in 2020, a breach of 885 million personal and financial records from First American Financial Corp, and many more.
As one would imagine, the handling of these attacks is not cheap either. Retail banks are forced out of millions of dollars, making better security precautions a necessity for the upcoming year.
It is not hard to imagine that the banking sector is a rather competitive one. If the modern priorities lie in personalized service, easier access, and safe data, then a retail bank offering just those is likely to dominate the market. By closely following the valuable insights of the industry, retail banking services can remain thriving.