2021 – The Year That Everything Changed in The World of Banking

COVID-19 changed banking: from changes in consumer behavior to the widespread adoption of digital technologies, global recession to job cuts and unemployment – for the banking industry, the impact has been rather profound. And although things are gradually coming back to normal, some of the repercussions of the pandemic may remain in place forever. This is why banks need to transform the way they interact with and service their customers. 

When the pandemic first struck, banks were forced to resort to some very radical changes – at extremely short notice. Not only did they have to close the doors on physical interactions, but they also had to quickly embrace a slew of digital technologies to meet customer demands – despite nationwide lockdowns, quarantine measures, and social distancing. 

  • Consumer behavior changed enormously, as they relied on online modes of banking – instead of paper-based, in-person transactions
  • Many employees had to seamlessly work from their homes, and adopt digital collaboration tools to interact with peers – instead of face-to-face physical meetings
  • Companies found themselves with the added responsibility of ensuring the health, safety, and productivity of their employees – as well as of the community

The after-effects of the pandemic

While 2021 presents an array of new challenges for banks, it also opened up several opportunities to move away from legacy systems, revamp business processes, and enhance operational efficiency via technology adoption. Here’s looking at the top changes that this year has brought about in the world of banking: 

  • Extreme digitization: One of the biggest changes the banking industry witnessed in 2021 is the sudden and widespread shift towards digitization. For an industry that has been accused of being averse to technology adoption, the pandemic brought about a much-needed transformation in how banking services are delivered (and consumed). 

When banks were forced to shut shop, digitization was the only way they could continue to serve their customers: in-branch transactions were quickly replaced by online interactions, in-person meetings replaced by digital collaboration tools, and manual work replaced by automation. 

 

The word is out. If you want to drive value in the post-pandemic era, you need to embrace technologies like RPA and AI to automate mundane tasks, streamline your workflows, and deliver unmatched service levels. 

  • Growing focus on customer experience: In the banking industry, customer experience has always been a core business focus. And although most banks have always worked towards addressing customer needs, issues, and concerns via physical interactions, the pandemic suddenly closed doors on face-to-face communication. 

To remain relevant and meet the demands of customers with the same comfort, convenience, and confidence of in-branch interactions, banks had to resort to novel ways to deliver unmatched customer experiences. 

 

Many banks turned to technologies like analytics and machine learning to drive a considered restructuring of operating models and deliver gratifying customer experiences. Using analytics, banks can now not only predict customer needs and wants; they can also get insights into operational challenges and process bottlenecks, and work towards improving them – so the overall customer experience is seamless and stress-free. 

  • Omnichannel banking: In addition to prioritizing customer experience and proactively forecasting unique needs, 2021 also brought omnichannel banking into the spotlight. Banks had to quickly start providing a consistent environment across an array of touchpoints: while in-person experiences were close to non-existent, they had to ensure reliable and aligned digital experiences across mobile, web, ATM, and other channels. 

If you want to create holistic and connected banking experiences that span different touchpoints in the customer journey, you need to establish agile strategies and lay extra emphasis on personalization. This includes offering digital interactions that match different channel preferences and investing in AI-enabled chatbots to step up your customer service game and make online interactions as easy and friendly as in-person. 

  • The rise of Neo banks: Another seismic shift the pandemic caused is in the number of Neo banks that have mushroomed in the market. With customers’ expectations from banks completely different now, several digital-only banks have now staked a claim in the banking space, delivering new-age banking experiences to customers. 

To compete with these modern banks, fight for customer attention, and sustain customer experiences, you need to move away from legacy infrastructures and systems and establish a fit-for-purpose, digital banking foundation that offers the same level of convenience, service, and personalization. Modern technology such as cloud, big data, AI, and analytics can do wonders to your existing processes and efficiencies and allow you to provide convenient, accessible, and flexible banking products and services. 

  • The significance of business agility: The pandemic also caused banks to realize the importance of business agility. The unexpected and extensive changes that the pandemic brought about required banks to respond with agility to cope up with those changes. Unfortunately, not all banks could deal with the far-reaching impact of the pandemic. Some stalled, but many others were quick to adopt technologies to respond to those changes with agility. 

If you want your banking organization to keep pace with changing economic, regulation, and technology trends and be prepared for the unexpected, agility is now a key strategic imperative. Leveraging technologies like analytics can help you generate new insights and adapt and respond to evolving disruptions with ease. Becoming agile can not only help you respond better and faster to an uncertain and changing world; it can also drive faster speed-to-market, higher customer satisfaction, and greater employee motivation. 

As consumer behavior adapts to the new normal, banks have to remodel their business strategies to keep up with the emergence of Neo banks as well as stay relevant in today’s disruptive and volatile market. This includes upgrading their digital channels, adopting new ways of working, offering consistent omnichannel experiences, and driving business agility. By transforming the enterprise-wide mindset from a mere recovery thinking to reimagining the business model, banks will be able to successfully evolve products, services, and channels to fit the era they’re in.