We are on the verge of a radical transformation in financial services. Banking as we know it is set to undergo significant change, driven by rapid technological advances, new regulations and evolving customer needs.
CYBG, owner of Clydesdale Bank, recently commissioned the Foresight Factory to compile the ‘Bank to the Future’ report, looking into the next wave of innovations throughout the banking sector and what impact they’ll have on consumer. Covering a range of key trends, including money management, customer service, payment methods and trust, security and verification, a number of key findings were identified:
Budgeting tools will become more precise and sophisticated – Monitoring personal finances will become more precise as new apps and services enable customers to accurately track spending and saving. Although the aspiration to budget is equally high across demographics, usage and interest in an app that motivates the user to stick to a personal goal such as savings is the most pronounced among younger customers and those in higher income categories. Indeed, 74% of Millennials and 68% of consumers, earning more than £75,000 per annum, have used or are interested in using an app that motivates the user to stick to a personal goal. These budgeting tools will become more sophisticated over time, offering account aggregation and predictive analysis functionalities.
Chat-based interfaces and voice-powered banking elevate brand-customer interactions - Over the medium term, the research expects brand-customer interactions to become more informal, direct and convenient due to the increasing sophistication of chat-base interfaces and voice commands. Chat messenger services will start to incorporate voice-powered banking to elevate customer engagement. In 2018, 28% of consumers had used voice commands on their smartphone or tablet and this is forecast to grow to 42% by 2025.
Financial advice will be delivered through artificial intelligence and in virtual reality spaces – Robotic advisors, powered by artificial intelligence will be able to carry out an increasingly wider array of banking activities and are set to become more human-like in their interactions with users. Furthermore, the research anticipates that virtual reality will gradually be deployed in the banking industry to enable more direct interaction with customers and allow for an immersive overview of key financial information. Currently, 35% of customers own or are interested in owning a virtual reality headset, rising to 60% among 25-34 year olds. By 2022, it expects that 45% of consumers will have used a virtual reality headset.
Wearable devices will characterise the future of payment methods – We will witness a gradual evolution in payment methods from contactless cards to wearable devices. The adoption of wearables is part of a wider narrative where digital devices will be more seamlessly connected and less intrusive. When it comes to payments, wearable devices enable easier and more convenient transactions – and their popularity is evident; 17% of consumers in total own a wearable device, rising to 29% among millennials and 39% among those earning more than £75,000 per annum.
Mass adoption of biometrics will transform payment systems and authentication processes – The usage of wearable devices will soon be complemented and ultimately be replaced by biometric payment methods. Biometric identification technology will greatly enhance security for consumers when carrying out banking activities and will be beneficial in preventing fraud. 20% of consumers have already used their fingerprint as a form of ID to make purchases, with a further 28% interested in doing so. Behavioural biometrics, which more accurately verify a user’s identity, are also anticipated to be increasingly deployed for authentication purposes.
Banks will need to build trust by safeguarding personal data and addressing cybercrime worries –The financial crisis meant consumers have lost trust in financial services industry. Going forward it is anticipated that consumers will place higher importance on banks managing their money responsibly, but also safeguarding their personal data. The research indicated that 74% of respondents would like more control over personal information they give to companies and the way in which it is stored – a sentiment which is felt equally high across demographics. Given that the majority of customers believe that the risk of falling victim to cybercrime is increasing, financial institutions should take these issues more seriously and aim to become trusted partners for consumers.