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The combination of fast-changing consumer preferences, disruptive technological innovation, and relentless competitive pressures have made banking automation and digitization more critical than ever before. Financial institutions today face mounting pressure to do more with less, accounting for factors such as evolving regulatory requirements, the need for more robust disaster planning, and the widespread need to reduce costs and deploy services more efficiently.
In a landscape where the customer experience has become a critical battleground, financial institutions like yours must keep technology strategy and the approach to customer journeys top of mind in 2022, and beyond. It’s the only way to maintain a competitive stance and grow wallet share.
There are several key trends to watch this year to help your financial institution succeed:
Digital banking is accelerating, and physical banking is transforming, resulting in merged channels.
While digital has been steadily on the rise for the past several years, the pandemic quickly accelerated the trajectory of usage and adoption – NCR saw its digital banking traffic increase by more than 260% at the start of the pandemic. Digital has become the primary preferred touchpoint for a wide majority. Consumers today are increasingly connected; they expect seamless, consistent interactions across all touchpoints. To meet these expectations and needs, digital-first banking will continue to be the main priority next year. However, digital-first doesn’t mean digital-only, but rather digital everywhere, which includes digital transformation of the branch and other traditionally physical touchpoints.
In response, branch strategy is currently being reimagined, with many optimizing their footprints to smaller, more digitally forward branch and retail models. Branch employees are migrating away from their traditional role as everyday activity managers and are embracing more meaningful relationship-centric advisory and sales roles. This allows them to have deeper, more productive conversations with customers instead of focusing on simple transactions or administrative tasks. There is also a mass shift toward more advanced self-service technologies, such as cash recycling terminals and ITMs, which have proven to extend the availability and accessibility of financial services.
As channels continue to integrate, institutions must make it a priority to implement a more simplified, flexible architecture to power and join what were once separate experiences, resulting in more unified customer journeys. By simplifying the technology that runs different customer touchpoints – from digital banking and cash recyclers, to ITMs and call centers – financial institutions can increase efficiencies, innovate more quickly and deliver more consistent customer experiences across interactions of all types.
When digital-first banking is done right, customers will be able to continue a transaction or activity wherever they like, regardless of where the process began, making what were once channel-specific interactions continuous across all touchpoints. This is made possible with modern front-end technology coupled with strengthened middle- and back-office tools, namely the cloud, APIs, and microservices.
The need for greater sustainability in banking will become increasingly prevalent. The way in which FIs procure is changing as sustainability concerns drive their way up the agenda. These include the need for more efficient product design, greater capabilities in remote monitoring and maintenance, and reduced environmental impact.
The financial industry has arguably been slower at change when it comes to sustainability so ensuring that new products lower power consumption is vitally important. The majority of the 3.1m ATMs across the globe will be on 24/7, even when in idle mode. The CO2 and energy costs of running the self-service network can however be improved by optimizing idle power consumption and introducing more efficient core modules and low-energy displays.
Moving to cash recycling can also deliver carbon footprint savings by reducing cash-in-transit visits by up to 50%. Then there’s considering the lifecycle impact – by using remote monitoring and upkeep alongside preventative maintenance, there can be consequent CO2 savings due to the reduction of engineer journeys.
More financial institutions will solidify their cryptocurrency strategies in 2022. Cryptocurrency has become more mainstream, piquing the interest of customers of all ages and demographics. In 2022, more institutions will map out when and how digital currencies will fit into their service offerings moving forward.
Financial institutions have an opportunity to be leaders when it comes to setting the vision of how digital currencies can work across all touchpoints. Customers will inevitably have questions about how to best engage with crypto, and institutions can continue to serve as the go-to source for financial guidance and input, strengthening relationships and trust.
Use cases such as buy, sell, hold; cross-border remittance; and payments will continue to become more common in the next year. Those that establish their strategies and expand customer access to frictionless digital currency capabilities will be strongly positioned to compete with emerging threats, cement customer loyalty, and create new revenue opportunities.
Personalization will continue to mature, with financial wellness initiatives standing out as a significant use case. The competitive landscape has become incredibly crowded with fintech, neobanks, and biotechs vying for market share. To successfully compete, it’s become more critical than ever for institutions to prioritize using data to personalize experiences. While personalization has been talked about for years, in the next year we expect to see these efforts start to pay off as financial institutions are able to act on this data in more meaningful ways.
As personalization efforts advance, a strong use case will include tailored advice and more narrowly targeted product and service recommendations designed to help customers strengthen their financial health. Such efforts will be especially important in the next year as many looks to re-establish their financial wellness in the pandemic’s wake.
More financial institutions will embrace the service model. As institutions are challenged with competing for resources, budgets, and priorities, more will continue to turn to the service model, especially for those areas that may not be as strategic to the institution. This doesn’t just mean managed IT services, but rather relying on a trusted partner to run areas such as security, compliance, business processes, and asset ownership. Such a model significantly enhances efficiencies and helps ensure strong outcomes for financial institutions while freeing their associates’ time and resources for more customer-facing and growth-focused areas and initiatives. A strategic service model can help financial institutions dedicate greater focus toward their core competencies.
Today’s financial institutions face more pressure than ever before to operate more efficiently and optimize margins while providing an innovative customer experience. In 2022, it will be critical for financial institutions to embrace the right technology and strategies as well as prioritize delivering digital-first, connected experiences to customers.