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The Future of Retail, Mobile, Online and Digital-Only Banking Technology

Article Title and Date of the Article

The future of retail, mobile, online and digital-only banking technology in 2021

INSIDER Feb. 26, 2021

Summary

The article by Alicia Phaneuf primarily discusses the future of retail, mobile, online and digital-only banking technology in 2021. This article analyzes the importance of technology and the increasing demand for mobile banking service by the consumer. Financial institutions have recently experienced a surge in the demand for technology. According to Phaneuf, in her article, the millennials and Gen Zers have significantly increased the demand as expressed by reports the surge in the demand of mobile banking applications are among this population. The uptrend is also as a result of the readily available technology by this age group.

Phaneuf, furthermore, noted that the growing desire to access financial services from digital channels has significantly influenced this trend. The enthusiasm and demand for this technology have also impacted positive growth in the mobile banking market as the financial institutions tend to come up with new banking technologies such as the Artificial Intelligence and Application Programming Interface to re-conceptualizing the industry. According to Phaneuf, digitalization has significantly improved service rendering and user experience to accommodate technology in the banking sector.

Retail banking refers to the form of consumer banking that offers specialized services such as saving bad checking out accounts, debit, and credits and they also offer loans. Retail banking has also improved significantly with the emerging technology as it is used by the banking that operational efficiency enhances thus reducing the cost of operation. As a result, the consumer experience improves prompting to the increased demand for technology.

Association to Specific Chapter Material and Concepts

6^th edition Banking management and Financial Services

The textbook reading from the 6^th edition of Bank Management and Financial Service by Peter S. Rose and Sylvia C. Hudgins state that the greatest challenge in the banking industry includes high competition rate and technology affects the productivity of the mobile banking sector.

Concepts

Competition and Technology

Competition and technology are the key drivers of banking and financial industry. Digitalization has had a vital role in improving and managing consumers experience as well as enhance the banking sectors operation. Increased technological improvements have also helped the financial industry reduce logistical case thereby reducing the cost of operating and maintaining the industry.

According to Phaneuf, the retail industry recorded a 39% improvement of cost of operation to a 24% of the banking executive noting that this technology is centered on improving the consume experience in the retail banking sector. Retail traders have also utilized the Banking-as-a-service (BaaS) technique to create a competitive market space for their services and financial offerings. Strategically, the Baas technology primarily focuses on diversified the customer product and revenue channels.

Other significant concept includes the reduction of peer to peer transactions. Phaneuf has noted that in 2020, the coronavirus pandemics led to a surge of mobile banking preference to reduce physical interactions between the consumers and their respective vendor.

Reason for Choosing this Article

This article is significant since it explores the different banking approaches and how technology serves the banking industry.

Important Points or Lessons Learned from this Article

Technology has completely revolutionized the banking industry by enable the institution to manage their customer experience and taste. Significantly, this technology enable the consumer access their accounts in a flexible at their own convenience.

The financial institutions benefit from the improved technology since they are able to establish a management principle to foster growth. It is also vital to note that the purpose of help the industry learn and manage the rapid changes in the banking industry through monitoring the Application programming Interface.

In a consumer perspective, it is improvement in the banking industry enable them to make deposit into their accounts and moreover they can make monetary transfers from one account to the other. Management also seems to be an important feature since the user can track their serving and earnings.

Full Copy of the Article

The future of retail, mobile, online, and digital-only banking technology in 2021

Alicia Phaneuf 

Feb 26, 2021, 11:45 PM

• An increasing demand for a digital banking experience from millennials and Gen Zers is transforming how the entire banking industry operates. 
• Consumers’ growing desire to access financial services from digital channels has led to a surge in new banking technologies that are reconceptualizing the banking industry. 
• Do you work in the Banking industry? Get business insights on the latest tech innovations, market trends, and your competitors with data-driven research.

Digitalization is changing how people interact and do business on a day-to-day basis, and advancements in banking technology are continuing to influence the future of financial services around the world. An increasing demand for a digital banking experience from millennials and Gen Zers is transforming how the entire banking industry operates. 

From retail and mobile banking, to neobank startups, technology has its hand in seemingly every aspect of the banking industry; and, the influence of technology will continue to launch banking into a digitized future.

Retail banking, also known as consumer banking, refers to the specific services banks can offer to consumers–such as savings and checking accounts, credit and debit cards, and loans. Consumers’ growing desire to access financial services from digital channels has led to a surge in new banking technologies that are reconceptualizing the entire retail banking market. 

Future of Retail Banking

Technology geared toward improving retail banks’ operational efficiency is positively impacting the market. According to Insider Intelligence, 39% of retail banking executives say that reducing costs is where technology has the greatest impact, compared to only 24% who say  it’s improving customer experience.

Retail banks are also launching platforms in the Banking-as-a-Service (BaaS) space to remain competitive. For example, UK neobank Starling used to exclusively offer business-to-consumer (B2C) retail banking services; but, after launching a BaaS platform, Starling diversified its product and revenue streams, helping it remain relevant in the neobank space.

Meanwhile, mobile banking has solidified its place as a must-have feature for financial institutions to remain competitive, particularly among digitally-savvy millennials and Gen Zers. In fact, over 45% of respondents to Insider Intelligence’s fourth annual Mobile Banking Competitive Edge Study identify mobile as a top-three factor that determines their choice of FI.

Future of Mobile Banking

Mobile banking has become the go-to method for users to make deposits, account transfers, and monitor their spendings and earnings—and a key differentiator for banking leaders. Nearly 80% of our survey respondents who have used mobile banking say it is the primary way they access their bank account.

Successful mobile banking options include money management features that help users cut spending and grow savings. BI Intelligence

Since the onset of the coronavirus pandemic, mobile capabilities is a more significant factor in bank selection among respondents than it was last year. Financial institutions should understand which mobile banking features consumers value most and where they stand compared to their competitors, so they can pinpoint specific areas to devote the most attention to.

The foremost concern consumers have when mobile banking remains security. The fear of data breach increases the demand for services that keep users’ data secure–allowing consumers to place holds on credit or debit cards, schedule travel alerts, and file and review card transaction disputes are some successful security banking features. 

Online banking, which includes mobile banking, refers to the overall experience of banking through digital channels, including mobile apps, desktop, live chatbots, and more.

Future of Online Banking

The popularity of mobile banking has surpassed that of online banking, and the overall number of online customers has slowed worldwide. According to Insider Intelligence, mobile banking is growing at five times the rate of online banking, and half of all online customers are also mobile banking users. 

Despite this growing popularity, some banks still fall short on the demand for mobile tasks, like bill pay and reward redemption, causing them to push users to online banking. However, even this push won’t be enough to popularize online banking as millenials and Gen Zers continue gravitating toward the mobile market.

Digital-only banks, also known as neobanks, are redefining the future of banking around the world. Though off to a slow start in the US due to high regulatory barriers, recent developments and the loosening of regulations suggest that US neobanks are set to take off.

Future of Digital-Only Banks

Sophisticated mobile banking tools are a top factor fueling US neobanks’ stratospheric rise—one that’s taken on more importance amid COVID-19. Incumbent financial institutions, neobanks, and tech companies alike can benefit from understanding exactly how leading neobanks are raising the bar for customer expectations and trust to successfully scale their businesses.

Chime offers a “no-fees” bank account. Chime

San Francisco-based Chime, the largest US neobank, has attracted over 7.4 million account holders by 2019, and is projected to grow this figure to 19.8 million in 2024. The development of more neobanks in the US will bring awareness to digital-only banking, and eventually wane-out traditional banking firms.

Banking Technology Trends

The future of banking technology is driven by consumers, especially Gen Zers, who see technology as something that enhances their lives. A common trend in banking technology is using an application programming interface (API) to make proprietary data available to anyone who has the consumer’s permission to access it.

Banks are using AI to smooth customer identification and authentication, while also mimicking live employees through chatbots and voice assistants. Android Community

APIs could be used to enable a bank’s mobile app to pull down customer account information. Fintechs have also used API technology to enable their businesses to work, and their success is encouraging competitors to develop their own APIs.

Additionally, Insider Intelligence reported that 48% of banking executives believe new technologies like blockchain and artificial intelligence (AI) will have the greatest impact on banking through 2020. According to Insider Intelligence, banks are exploring blockchain technology in hopes of streamlining processes and cutting costs.

Consumers can already see AI being used by most banks through chatbots in the front office. Banks are using AI to smooth customer identification and authentication, while also mimicking live employees through chatbots and voice assistants.