It has been an unusually eventful year for central banks all over the world in 2020, and given the current circumstances, the coming year is set to be no less busy. With a variety of challenges to overcome, therefore, central banks hope to achieve several important goals before the end of 2021.
Change is as much a part of life as breath itself, and that’s true in banking. Already in the midst of transforming itself to meet the expectations of its increasingly digitally inclined customer base better, COVID-19 gave it a swift kick that has expedited those adjustments. As society transitions into the “new normal”, what are some of the positive changes in banking that will remain even as the virus wanes?
As banking advances further into the Digital Age, some aspects will remain the same while others change. One factor that will not change is the need for banks to manage risk. Technology is both an opportunity and a challenge, aiding risk management to become more efficient but introducing new risks. One thing is certain, banking of the future will still be centred on the goal of providing top-notch customer service, which will be enhanced by data and technology.
Although banks have been in financial services longer than anyone else, they have a thing or two to learn about customer service from the mammoths in the retail sector. Retail subscription services are taking off, promising to deliver combinations of products conformed to the needs and likes of customers, whose preferences are well known from data analyses. What similar steps can banks adopt in their drive to augment customer satisfaction?
Sustainability is popular in so many ways today, including in investment. It’s not surprising that banks are going all out to link their brands with such a trendy concept. But Lundquist has dived beneath the surface to determine where European banks really stand on sustainability, how it is molding their corporate strategies and communications. The results prove that most banks still have a way to go to be fully credible.
Diversity and inclusion have recently become top goals in the strategic policies of many banks, but how is execution matching up? Research continues to expose large gaps between good intentions on paper and good outcomes in practice. Diversity and inclusion are more than nice-sounding words; when realized, they boost profitability. Banks that go no further than prioritising these goals in mission statements miss out on playing the ace.
Robotics has long been touted as the next big wave that will boost efficiency, increase customer satisfaction and, most importantly, slash costs and maximize profits. Robo-advisors are now entrenched in the investment industry, but most of these firms are not experiencing all of the benefits of automation; in fact, many of them are losing money. What are the main factors cheating robo-advisors of profitability?
Successful e-commerce is as much about the customer experience as anything else. Choices need to be clear but abundant; payment quick and easy—or customers will move on. Having become accustomed to purchasing goods and services seamlessly through digital channels, customers expect the same from their providers of financial products and services. Banks need to employ a lesson or two from the e-commerce giants to meet customer expectations.
Open Banking, which allows third parties to build applications around the activities of established banks, is curtailing the way banks have always functioned. The tried-and-true vertical-integration model, through which a bank maintains a firm grip on all of its operations, is being replaced by a more cooperative approach. How will innovative banks fulfill their roles as suppliers, producers and retailers of financial products and services in the Open Banking era?
Automation saves time, cuts cost and carries out routine tasks with unmatched efficiency, so who wouldn’t welcome it? Possibly the people whose income currently depends on carrying out those tasks. Digitalization is guaranteed to strip out much routine work in banking, but it will not necessary mean fewer bank jobs. Roles will be reinvented so that technology frees human staff to provide customers with excellent advice and service.