Extensive lockdowns during the COVID-19 pandemic accelerated the adoption of digital banking. Online payments through digital apps quickly became popular among people. The last two years have certainly driven the focus of banking institutions on digitization and user-centricity. The bar has been set high for digital banking trends with a whole new generation emerging for the post-covid era. According to a research report from McKinsey, 75% of the existing customers have tried using different brands since the outburst of the pandemic. Most of them are expected to adopt new brands and stores into their post-pandemic lifestyle.
People have become more aware and sensitive about the basic human virtues that play a part in making any product. Consumers today seek empathy, loyalty, and emotional connection from the brands that they invest in.
The time has come for banking institutions to widen their perceptions and enrich the digital experience with emotional connection.
Let’s look at the top five digital banking trends that are most likely to emerge this year.
- Increased Adoption of Open Banking
With more and more consumers becoming tech-savvy and demanding seamless banking experiences, Open Banking is likely to see a surge in adoption in 2023. This trend involves the use of open APIs, allowing customers to easily and securely share their financial data with third-party providers to access a range of financial services. By allowing access to customers’ data and networking of accounts with their consent to third-party financial service providers, open banking is about to be a major source of innovation that is expected to reshape the entire banking industry.
- Expansion of Contactless Payments
The COVID-19 pandemic has accelerated the growth of contactless payments, and this trend is likely to continue in 2023. In countries like India, contactless payments were a huge rage even before the pandemic hit the entire world. The growth of this payment method has only flourished after that as countries bring in more policies to promote a digital and hassle-free world. Banks and financial institutions are likely to invest in expanding their contactless payment capabilities to cater to the changing needs and preferences of customers.
- Artificial Intelligence and Machine Learning
AI and ML will play a critical role in shaping the future of digital banking. Banks are already using these technologies to improve customer service, detect fraud, and enhance the overall banking experience. ML solutions are already automating a lot of manual tasks in traditional banks, it’s not just cost-efficient to deploy these solutions but it also enhances customer experience and enables banks to scale their operations and offerings. Even though AI and ML are still in their nascent stages in the banking sector, their use is predicted to grow in the coming years. In 2023, we can expect to see more advanced applications of AI and ML in digital banking.
- Growth of Neobanks
Neobanks, or digital-only banks, have seen tremendous growth in recent years, and this trend is likely to continue in 2023. These banks offer customers a more convenient and accessible way to manage their finances, with a focus on mobile and online banking. It’s a perfect source of banking for tech-savvy folks. Neobanks are cost-efficient since they don’t have physical branches and save rent, electricity, infrastructure, and other expenses. It is also very easy to create an account in a neobank unlike in a traditional bank which requires you to fill out multiple forms and you also have to bear with the waiting time. Creating an account in a neobank is almost like a cakewalk where you can create an account right in the comfort of your home, from your nearest digital device.
- Increased Use of Blockchain
Blockchain technology is expected to become increasingly important in the world of digital banking in 2023. Banks are already exploring the use of blockchain for various applications, such as cross-border payments, digital identity verification, and supply chain management. This trend is likely to continue as more and more banks recognize the potential benefits of blockchain technology. Blockchain technology is also a prime constituent of cryptocurrency and as the age of cryptocurrency is on the rise, banks are slowly integrating crypto services into their offerings. This is again bolstering the growth of blockchain in the banking sector.
With unexpected catastrophes such as the Covid-19 pandemic, businesses have realized the importance of adopting modern technology into their operations. They’ve understood that it is pivotal to have a solid backup infrastructure in case of emergencies to keep the business running smoothly and technology is doing just that for most industries. Modern technology still has tons of potential undiscovered and the future looks only more exciting and promising for the financial services industry.