Trends in digital banking: how financial institutions will evolve

Thanks to developments in IT and telecommunications, so-called digital banking brings together a multitude of banking and financial players together with technology companies to improve the quality of services and business performance. In this regard, the following trends in digital banking are anticipated.

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Current status of digital banking

Over the last two and a half years, developments in connectivity and digital services have accelerated significantly. Indeed, the context of the pandemic and the need to migrate most activities to the digital realm demonstrated the versatility and capacity of the latter to keep society running both commercially and productively.

As far as the banking sector is concerned, it has finally accepted the conditions posed by the digital world. This is largely because most of the technologies needed for digital banking have been in place for years: from payment methods, applications and virtual wallets to online stores and management platforms, the transition has been fairly simple.

Today, far from having slowed down, this process is expanding significantly due to developments in the European community, regulations on open banking, and currents that advocate the creation of open information or open data. This is a process of structural transformation in which banking data and information are becoming a highly lucrative asset.

This paradigm shift requires an IT infrastructure dedicated exclusively to data processing and the ability to target its use through an application programming interface (API). These allow specialized software to be used to offer banking and financial services to users.

The dominant trend is towards the comprehensive digitization of products and services and the foundation of a solid infrastructure for a new, predominantly digital financial ecosystem. Therefore, progress is being made in terms of interoperability, user experience and transparency in access to users’ financial data and information.

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Investment in technology and talent

This is a trend whose evolution transcends the boundaries of the financial sector: in general, the whole world understands that technology and talent represent two fundamental factors for improving business performance and the use of resources in any activity. For digital banking, both are a necessity to remain competitive.

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Promoting digital services

Digital services are not only a necessity for consumers, customers and users, but also an economic advantage for banks and financial institutions. Indeed, personal management and process automation significantly reduce the cost of operations and improve the effectiveness of the services offered. The industry is therefore investing heavily in their promotion and encouragement.

Emerging players and fintechs

As accessibility to IT products improves and the employment sector grows, there are a multitude of small and medium-sized companies emerging from the financial technology or fintech sector. Thanks to this, there are many alliances of traditional institutions such as banks, insurance companies and credit institutions with technology companies that can help improve performance in the digital realm.

Personalization of services

One of the most important advantages and one of the trends in digital banking that is growing the most among industry players -not only banking-, is the importance of data and financial information to produce services that are tailored to the profile of the individual. These types of actions increase the depth of market research and IT processes optimize segmentation.

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Integration of data and services from PSD2 providers

As mentioned above, customer data and financial information is one of the most important assets for digital banking as a whole. Therefore, one of the most representative digital banking trends in this new sector is the constitution of an ecosystem of information exchange by financial institutions and banks with third-party providers.

Personal management and digital platforms

Although this was mentioned tangentially, online personal management represents an attribute that is no longer competitive, but mandatory. Nowadays, people and users are increasingly looking for better management systems and faster platforms, with better user experience and visual appeal. Therefore, this is a trend that will never stop because it is the packaging of digital services.

From Open banking to Open Data

Finally, these two areas refer to the same phenomenon: the trend in the opening of information.

In the case of open banking, this is an ongoing process in which, as we said, financial information circulates under certain parameters between providers and institutions.

In the case of open data, this process is still in formation and aims to open up this information outside the financial sector.

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