The future of retail, mobile, online & digital-only banking technology

Business Insider Intelligence is launching its brand new Banking coverage in early September.

The digital age is changing how people interact and do business on a day-to-day basis, and technological advancements are continuing to influence the future of banking 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.

Future of Retail Banking

Retail 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.

Technology geared toward improving retail banks' operational efficiency is positively impacting the market. According to Business 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.

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. According to Business Insider Intelligence's Mobile Banking Competitive Edge Study, a massive 89% of survey respondents said they use mobile banking.

A top concern consumers have when choosing mobile banks is 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.

Mobile wallets are another up-and-coming feature in mobile banking. Mobile wallets are applications that emphasize convenience; they allow users to make purchases online or in-store with their smartphones – without ever having to take out their physical credit card.

Successful mobile banking options also include money management features that help users cut spending and grow savings. The future of mobile banking points toward offering savings tools and financial wellness scores, which is seen as particularly important among millennials.

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 Business 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.

Future of Digital-Only Banks

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.

San Francisco-based neobank Chime has attracted over 2 million consumers and is adding more per month than Wells Fargo or Citi – demonstrating the shift toward digital channels. The development of more neobanks in the US will bring awareness to digital only banking, and eventually wane-out traditional banking competitors.

According to Business Insider Intelligence's Evolution of the US Neobank Market report, the increasing competitive digital banking only landscape is going to cause banks to overhaul their entire business, catering to the demands of the digital era.

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.

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, Business 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 Business 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.

Banking Industry Analysis

With so many different facets of the banking industry undergoing change, it's crucial for those connected to the banking industry to be informed and stay ahead. That's why Business Insider Intelligence is launching Banking, our latest research coverage area, to keep you up to date on the latest banking trends and shakeups.

Click here to obtain an exclusive FREE preview of Banking!