For a long time, the banking industry had little competition. They determined who could have a checking account, who could get a loan and who they wanted to court for financial opportunities.
With less banking regulations and loopholes in banking rules, new banking opportunities have crept in to change how people handle their money.
There are two groups that these new banking entities focus their attention on. Those who are at the bottom of the totem pole and negatively impacted by big banks. The other is the financial elites who want a specialized banking experience.
Trends in banking now have traditional banks on notice and they are being forced to conform.
Are you looking or a new bank and want to know what's trending in the financial industry? Keep reading for five banking trends set to rule finance.
1. Customer Targeting Trends in Banking
One thing technology has done for every business industry is to provide tools to help businesses better understand their customers. Banks can now build strategies around targeted audiences.
These strategies can zero in on specific demographic drivers like where a customer lives, work, and are most-likely spend their disposable cash. When it comes to investment opportunities, banks can create sub-groups. The data is based on consumers' annual income, industries they work in, and their age groups.
A lot of financial services companies offer rewards programs. Look to see more banks offering cashback programs and discount incentives for their favorite stores and restaurants.
Customer targeting can also be generational. Banks can also predict the future behavior of their customer's children based on their parent's banking habits. They are potential future customers so the earlier the banks can start marketing to them, the better.
2. Predictive Banking Using Artificial Intelligence
Artificial Intelligence is prevalent in so many aspects of our lives. In the financial industry, it is referred to as predictive banking. We already experience it when we call our banks and get the automated response system.
In its simplest form, the IVR system guides us through the options available. It can perform basic functions like giving out account balance and providing the last ten transactions.
This innovative banking tool can now guide consumers by providing extended personal banking experience.
Instead of having sales representatives making cold calls to customers, predictive banking can do the job through a series of questions. The AI is designed to understand what the customer wants based on the answer they provide.
Private banks will find the technology extremely beneficial as they cater to consumers that are looking for investment and retirement opportunities.
3. Digital Only Banking
Some consumers are frightened by the thought of digital-only banking. Unfortunately, it is a reality of future banking. Whether you are ready for it or not, there is a growing market for this type of service.
In an era of digital technology, people are becoming more dependent on smart devices and apps to do everything. This is the market that is driving innovative banking.
Another driver is the high cost of maintaining physical bank locations.
If you are paying attention, you may have noticed the changes to ATMs. At the larger banks, you can do everything from making deposits, withdrawals, and mortgage payments. Some machines even cash checks and allow users to designate how cash is returned.
In some areas, banks are experimenting heavily with standalone digital tellers in shopping center parking lots.
SmartPhone Technology In Banking
Digital-only banking is not just for ATMs, it is also being introduced on Smart devices. This technology allows users to deposit checks by taking an image on their Smartphones.
The funds are subject to standard banking deposits. This means you can have full access to your funds as soon as the transaction is completed.
Digital Banking Cuts Costs And Increases Competitiveness
Overall, the lower the overhead costs a bank has to content with, the greater the US Bank Promotions they can offer and the more competitive they can be within the industry. Digital only banking allows for significantly decreased overhead as banks consolidate brick and mortar branches or only offer digital banking.
4. A Focus on Banking Payment Technology
As society moves increasingly closer to a paperless society, expect to see more focus on payment technology solutions. This initiative is not just for the convenience of the consumer. Banking institutions are also focusing their attention on ways to make more money as traditional means dry up.
One huge moneymaker for banks is the ability to capitalize on non-sufficient funds fees. With financial industry trends, non-banking providers are figuring out ways to lure consumers with innovation that all but eliminates those costly expenses.
Digital banking will soon eliminate checks. When this happens, consumers can only spend what they actually have in the bank. In the past, traditional banks have responded by offering overdraft protection.
Now banks understand there is value in helping consumers avoid those costly fees. With payment technology, they can now introduce better ways for consumers to pay bills, transfer money to friends and family, and even contribute to retirement accounts.
5. Increased Use of Banks Application Programming Interfaces (APIs)
APIs are innovative banking technology that is leading the way in open banking. Consumers want more control over how they manage their finances and who they give access to their banking information.
If you have ever set-up a bill payment with a utility company you have utilized an API. Giving your mortgage company access to automatically draft your mortgage payment each month requires API. It is everywhere and sometimes consumers have no idea what is happening behind the scenes to make their lives easier.
The latest innovative banking trend in API is authentication processes used by alternative financial lenders. Online loans for business owners rely on API to verify applicants have a valid bank account.
Consumers follow a verification process within the online application that verifies the bank account.
Business to business interactions will be less cumbersome, and decisions will be made faster with API. Now one company can access the customer's records, financial statements, and other financial records, in seconds.
Are You Ready to Update Your Banking Experience?
Will these trends in banking improve your banking experience in the coming years? These improvements will help banks better understand the needs of consumers while streamlining financial processes.
Did you find this article on top new banking trends useful? Check out our section on Finance, Investing, and Crypto to see what the future of finance looks like. Bank on it!
