Shaping the Future: 7 Digital Technology Trends Reshaping Banking and Financial Services in 2023

The financial services sector is undergoing a monumental transformation, driven by the relentless surge of digital technology. According to the Bank Administration Institute (BAI), a staggering 61% of consumers anticipate their banking services to be entirely digital by 2024. This seismic shift raises a fundamental question: How will this transformation affect the way banks and financial institutions engage with their customers? In this article, we delve into seven digital technology trends that are poised to reshape the global banking industry in 2023 and beyond.

Trend 1: Comprehensive Digital Onboarding

As we step into 2023, the topmost challenge and investment priority for banks, as revealed by the BAI Banking Outlook survey, is new customer acquisition. The challenge is compounded by the fact that there are fewer established customers willing to switch their banking services.

To tackle this challenge, banks are increasingly concentrating on providing a seamless end-to-end digital onboarding experience. Gone are the days of hybrid approaches that lure customers with digital offerings only to mandate them to finalize the application process at a physical branch. Today's customers are tech-savvy and recognize that traditional wet signatures and in-person screenings are no longer prerequisites for secure identification.

Customers now demand a frictionless onboarding process, and challenger banks and leaders in financial services are gearing up to expedite the adoption of pure digital onboarding. Institutions that fail to adapt risk losing substantial market share.

Trend 2: The Emergence of Digital Identity

Digital identity transcends the onboarding process. Customers now anticipate the convenience of digital signatures and biometrics for various online approval processes. However, they also place great value on choice, especially when confronted with intricate financial offerings.

Customers are seeking the flexibility of pure digital self-service, banker-assisted hybrid service, and full personal service, with seamless transitions between these options as needed. Additionally, they yearn for digital services that provide more human-like engagement without necessitating visits to physical branches.

Trend 3: Lifestyle Services as Disruptors

Millennials are spearheading the adoption of digital banking, with a resounding 70% expressing their willingness to switch banks for a superior digital app. This tech-savvy generation offers a glimpse into the future, where Super Apps are set to dominate most digital interactions across various facets of life.

To become the Primary Financial Institution (PFI) in this hyper-connected ecosystem, banks must engage with and support customers in their day-to-day lives. Lifestyle-specific services, such as those relating to automobiles, residences, and health, are gaining traction. Furthermore, banks are exploring strategies to reward customer loyalty with lifestyle perks, spanning dry cleaning to event planning.

Trend 4: The Evolution of Mobile Apps

While customers will persistently demand improved mobile apps, the rise of embedded finance could potentially reshape the role of these apps. Embedded finance empowers customers to access banking services at their convenience, even outside the confines of traditional banking premises.

By integrating financial services into non-banking environments, particularly on e-commerce platforms, banks can trail and assist customers throughout their life journeys, streamlining the overall customer experience. This approach enhances customer engagement, retention rates, and diminishes acquisition costs, all while unearthing fresh revenue streams from segments previously untouched by banking services.

Trend 5: The Impact of Wearables

The global wearable device market is projected to reach a staggering $109 billion in 2024, with these devices typically offering seamless integration with mobile app operating systems. This symbiotic relationship is fueling the advancement of wearable financial services, particularly in the realm of payments.

While payments are an evident application, the ultimate goal is to empower customers to manage their lives more efficiently through wearables. For instance, health monitors could seamlessly interact with health insurance providers, while driving monitors could forge connections with car insurance providers, offering customers more personalized and competitive premium rates.

Trend 6: Entitlements and Lifestyle Benefits

Entitlements, such as offering a year of complimentary home insurance upon the customer's decision to take out a mortgage, have become potent tools for attracting and retaining customers. Customers now increasingly anticipate such privileges when utilizing digital services, be it for the first time or repeatedly.

Effective Customer Relationship Management (CRM) analytics can empower banks to comprehend customer desires and needs, enabling them to proactively offer personalized benefits, sometimes even before customers themselves are aware of these requirements.

Trend 7: The Ascendance of Digital Wallets

Digital wallets are poised to dominate over half of all e-commerce payments globally by 2024, while mobile wallet usage is projected to soar by 2025. In stark contrast, traditional bank cards are predicted to experience a 50% decline by 2030.

Digital wallets offer simplicity and convenience to busy consumers, and banks that invest in digital systems designed to support embedded financial technology will gain a decisive advantage in the continually evolving global digital landscape.

As the financial landscape undergoes these profound transformations, the importance of a trusted partner cannot be overstated. Veripark, a globally recognized leader in financial technology solutions, stands at the forefront of enabling financial institutions to embrace these digital trends and remain competitive. With their expertise, innovation, and unwavering commitment to excellence, Veripark is the perfect partner for institutions looking to thrive in the digital age.

Contact This email address is being protected from spambots. You need JavaScript enabled to view it. for additional information about Veripark and how  to position your institution as a leader in the digital financial services landscape.