The new outlook for the financial sector reveals an industry that is more proactive, adaptable and innovative, capable of improving its operating model, identifying opportunities and continuously innovating with the use of data. It therefore requires a complete overhaul of the sector itself and its relationship with customers
In the current banking landscape, investment in security and appropriate software is key, argues GDS Modellica
The banking industry currently finds itself at a decisive moment. The pandemic has marked a turning point that has driven a complete overhaul of the sector and its relationship with customers. The user/customer is now the number-one focus, and the aim of the industry needs to be to offer the very best services, facilities, loans and insurance. In order to do this, the financial industry needs to make considerable investments in technology and fintech to improve the way it operates and adapt to the digital world. Technology has now become part of the very foundations of the sector, upon which everything depends, from operations to customer interaction. According to KPMG, digital users have grown significantly and 50% of banking products sold in Spain in 2020 were sold online. Furthermore, the industry has been engaged in a cost-reduction exercise ever since the 2008 recession, and around 50% of branch offices have closed in Spain since then.
In this new financial ecosystem, digital platforms are faster and easier to use. However, the digitalisation of banking has a downside, namely branch closures, job losses and problems with access to banking services according to age or geographical location. Antonio García Rouco, managing director atGDS Modellica, believes that “access and security are key questions. Banks have a responsibility to adapt to the needs of their customers so that they can manage their finances in the way that is best for them, whether that is online or in person, regardless of where they live.” García Rouco went on to say, “It is vitally important that banks don’t just invest in technology and expanding their reach but also in security. Financial services are not immune to risk when using technology, and security is necessary for both internal and external access”. Institutions have to ensure that their assets are secure and protect their customers whilst simultaneously offering remote banking services, whether that is the ability to open and manage accounts, pay bills or apply for loans. This is especially true for those customers that have difficulty accessing banking services due to their age or geographic location. In response to this need, GDS Modellica offers solutions to support critical functions for risk managers by facilitating the development of new strategies and eliminating common systemic obstacles.
The current banking industry, which is proactive, flexible, inclusive and innovative, needs to take advantage of existing infrastructure to build on its role as a mediator and digital connector, appify banking products and services and explore new business models and digital distribution channels. According to the study by Accenture entitled ‘Top 10 Trends for 2022’, future trends for the banking industry include super-apps, which are capable of integrating financial services on large online platforms, and sustainability, whereby banks will need to be even more decisive and committed to uncovering solutions for climate change and other environmental challenges.
Innovation is another trend, with digital services becoming indispensable. Similarly, banking fees may also soon become a thing of the past as institutions compete with other players (fintechs and digital banks) to offer free services.
Other trends that feature in the study include digital currencies and the increase in smart operations on the back of advances in artificial intelligence. Finally, the report also touches on the evolution of payment methods, mergers and acquisitions for growth and profitability and the culture change and new financial paradigm, in which technology, engineering, data and security will become indispensable for banks looking to face reality and step into the future.