financial services forecast for 2022
As investments explode, unemployment declines and the European economy soars, financial institutions are expected to have a strong year in 2022. But with changing consumer behavior after the pandemic, banks will need to embrace new ones. online strategies and intensify their digital transformations to stay competitive in the new digital world first. To help your organization prepare for essential innovation, here are my top predictions for the financial services industry in 2022.
The continued rise of open finance
The switch to digital banking throughout COVID-19 lockdowns will accelerate open finance in 2022 – with customers now much more willing to share their data with third-party apps, online trading platforms and other non-commercial services. traditional.
These new consumer attitudes will continue to fuel the growth of digital challengers and elicit a response from traditional institutions. Many Tier 1 banks will upgrade their data systems and internal infrastructure and start launching Banking-as-a-Service offerings to tap into new markets and recover lost revenue. They will also begin to sell the benefits of data sharing to more hesitant customers, explaining how the resulting new services can help them better manage their finances while demonstrating their efforts to protect consumer information.
As open banking standards such as PSD2 develop and strengthen, the adoption of banking services for the unbanked and underbanked will also increase. Fintechs have shown that it is possible to offer basic banking services to people with poor or poor credit histories. Traditional banks will begin to introduce similar services with the aim of expanding the market and regaining their lost share.
Open data ecosystems will continue to evolve – albeit slowly
As digital banking and open finance expand, businesses will capture huge amounts of data that potentially contains crucial customer information. To store, sort and analyze the value of this information requires access to an ecosystem of open data, but such ecosystems will not yet transform the financial sector.
Unlike other software industries using open data ecosystems, financial services companies are highly regulated and the data stored is particularly sensitive and personal. First, banks and the larger data-sharing ecosystem will need to develop protocols that protect data security and privacy before focusing on customer analysis. Consumers trust banks much more with their financial data than other major tech platforms, but this goodwill could easily be wasted without proper care.
In the meantime, open data ecosystems will continue to improve to the point that for financial institutions the wait will be worth the wait. New tools will emerge to help engineers manage and extract value from data faster than ever. And businesses will be able to adopt open source data formats, allowing their data to be compatible between programming languages ââand future analysis tools, eliminating the need for costly data transformations.
Hyper-personalization will become an imperative
With the emergence of more fintech companies throughout 2022, existing banks will find ways to differentiate themselves from the competition and take advantage of new advancements in personalization.
Customers are used to enjoying products and features to suit their tastes, from TV shows suggested by Netflix to tailored discounts from Amazon. Now they expect the same from their financial services. For banks, that could mean sending customers relevant offers from partner retailers, offering AI-based budgeting advice if a user spends too much, or even creating loan agreements instantly tailored to a consumer’s needs.
To achieve hyper-personalization, banks will upgrade their databases and architecture, and move to predictive / prescriptive analytics that will allow their services to be personalized in a way that resonates with customers.
Digital Newcomers Will Drive Customer Experience and Industry Collaboration
Digital challenger banks have revolutionized the customer experience in recent years, with smooth interfaces, fast registrations, and new services like commission-free securities trading, pushing many consumers away from Tier 1. In 2022, incumbents will start. to step back, improving the customer experience for basic and complex banking transactions such as mortgages by providing rapid self-service tools as standard practice. In turn, digitizing and automating these processes will reduce manual workloads for back office staff, freeing up resources to further maximize profit potential.
Large financial institutions will also recruit CIOs and CIOs from outside technology and industry vendors to open up new perspectives on how to compete with the challengers. These new leaders will be more open than traditional bank leaders to working with third parties, including competitors, and will strive to integrate third-party services into the bank’s range of offerings to drive innovation and l consumer attraction.
Financial institutions will then move from building and managing databases – which is very capital intensive – to agile, cloud-based data architectures and applications. Legacy infrastructure and the inability to connect data systems have long stifled innovation and the customer experience. However, with the influence of technology-centric CTOs and CIOs, financial services companies will modernize their outdated IT models by embracing cloud migration. As a result, I expect innovation from legacy financial institutions to increase throughout 2022 and beyond.