What is in Store for Digital Banking in 2022?
Digitalization and technological advances were some of the biggest reasons for the changes in consumer behavior within banking. In 2021, a lot has been said about the impact of digital transformation in traditional industries, such as banking, and the need for reinvention to readapt to the new reality and to competitors that are already digital-first companies.
The Covid-19 pandemic was another accelerator of the digital movement and changes in consumer behavior, which caused a significant impact on how people live and interact with services. Research shows that due to the pandemic, companies have accelerated their digital operations by three to four years. Another research indicates that the use of financial apps and mobile banking services has increased by 72% in Europe due to the pandemic.
In 2022, the story goes on: digitalization is still an important topic, for the banking sector especially. So, here are a few things that are in store for the future of digital banking.
Industries more oriented to the user experience
The investment in user experience and more user-friendly and human-centric services is increasing. With the rise of neobanks, more traditional companies are focusing on that strategy to not only retain current customers but also to attract a new group of customers that demand more personalized services. According to McKinsey research, there’s a strong relationship between companies with the best design practices and the increase of their revenues.
The same research suggests that good design matters whether the company focuses on digital products, services, or some combination of those. An investment in the customer experience will be even more a key differential in the decision-making process of customers.
The focus on the user experience will become even stronger with the rise of metaverse popularity and the increased number of major brands experimenting with it. For financial institutions, there will come a time when they’ll need to be able to provide their customers with this digital experience and allow them to create digital IDs, for example, to interact in this new ecosystem.
Banking-as-a-Service is here to stay
Banking-as-a-Service (BaaS) is one of the main trends that the traditional banking sector needs to keep an eye on. The BaaS model allows traditional banks to reach new customers from the most varied segments. It helps with customization, reduces costs, and provides more agile operations. Many countries have already begun to introduce those operations, which proves that the financial industry is moving towards a new phase of operations and banks can get ahead of it before their competitors.
Digital banking will play a big part in financial inclusion
Digitalization of banking services has played an important part in providing tools to help people to move from cash-based transactions to digital financial operations, especially during the pandemic. A study from the U.N. Environment Programme says that improving the availability and accessibility of affordable financial products and services increase the Gross Domestic Product (GDP) in developing economies up to 14% and in frontier markets by 30%. For this new year, the increase in digitalization of operations will help even more people to have access to banking services and their digital products.
AI will continue to be a key tool on the path of digitalization
Artificial Intelligence (AI) is a crucial tool to empower the transformation of organizations such as traditional financial institutions. AI-powered systems help to increase security, provide more personalized experiences for customers, and, for banks, in particular, AI-powered systems help with KYC processes and risk management.
At LOQR, we understand the importance and impact of digitalization on the banking sector. Every trend mentioned above can help financial institutions to provide better and more relevant services and products to their customers. The future of banking in 2022 is digital and those tools and strategies can help institutions to be more profitable and level with their competitors.
If you’re ready to take the next step towards digitalization, contact us to know more about LOQR’s solutions to empower digital lives.