Daily interactions and corporate transactions are being transformed by digitalization, and global financial services will continue to be impacted by developments in banking technology. The whole banking sector is changing due to millennials and Gen Zers’ growing need for a digital banking experience.

Technology has a hand in almost every part of the banking sector, from retail and mobile banking to neobank startups, and its influence will continue to propel banking into a digitized future.

The term “retail banking,” usually referred to as “consumer banking,” describes the particular services that banks can provide to customers, such as savings and checking accounts, credit and debit cards, and loans. New banking technologies are proliferating as a result of consumers’ rising desire to obtain financial services through digital channels, which is redefining the whole retail banking industry.

Future of retail banking

Technology targeted toward enhancing the operational effectiveness of retail banks is having a favorable market impact. Insider Intelligence reports that 39% of retail banking executives believe cost-cutting is where technology has the greatest influence, as opposed to 24% who believe it has the greatest impact on improving customer experience.

To stay competitive, retail banks are also introducing platforms in the Banking-as-a-Service market. For instance, UK neobank Starling formerly only provided business-to-consumer (B2C) retail banking services; but, after introducing a BaaS platform, Starling broadened its product offering and revenue sources, assisting it in staying competitive in the new bank market.

In the meantime, mobile banking has cemented its status as a tool that financial institutions must offer to be competitive, especially with the digitally aware millennials and Gen Zers. In the top three factors that influence their choice of a financial institution, over 45% of respondents to Insider Intelligence’s fourth annual Mobile Banking Competitive Edge Study site mobile.

Future of mobile banking

As a significant difference for banking leaders, mobile banking has emerged as the preferred method for consumers to make deposits, account transfers, and track their spending and earnings. Nearly 80% of those who have used mobile banking in our poll claim it is their main method of accessing their bank accounts.

Since the start of the coronavirus epidemic, respondents are more likely to select a bank based on mobile capabilities than they were the previous year. Financial institutions should know which mobile banking services customers find most valuable and how they compare to their rivals so they can focus on the areas that need the greatest improvement.

Security is still the top issue for customers when using mobile banking. The demand for services that protect user data grows as data breaches become more likely. Some successful security banking features include letting customers put holds on their credit or debit cards, setting up travel alerts, and filing and reviewing card transaction disputes.

Mobile apps, desktop websites, live chatbots, and other digital channels are all included in what is referred to be online banking, which also includes mobile banking.

Future of online banking

Online banking is no longer as popular as mobile banking, and there has been a global slowdown in the growth of online users. Insider Intelligence claims that mobile banking is expanding five times as quickly as online banking and that mobile banking accounts for half of all online consumers.

Despite this rising acceptance, several banks continue to struggle to meet the demand for mobile functions like bill payment and reward redemption, which forces customers to switch to online banking. Even said, Millennials and Gen Zers’ continued inclination toward the mobile market will make it difficult for internet banking to gain widespread acceptance.

Neobanks, or digital-only banks, are altering the future of banking globally. High regulatory barriers caused the US neobank industry to get off to a poor start, but recent developments and the easing of rules indicate that the sector is about to take off.

Future of digital-only banks

A major aspect driving the meteoric expansion of US neobanks is sophisticated mobile banking facilities, which have gained significance in light of COVID-19. Neobanks, established financial institutions, and IT firms can all gain from knowing precisely how top neobanks are increasing the bar for client expectations and trust to successfully develop their operations.

The largest US neobank, Chime, which is situated in San Francisco, has attracted more than 7.4 million account users as of 2019 and is expected to increase that number to 19.8 million in 2024. More neobanks emerging in the US will raise awareness of digital-only banking and ultimately kill off traditional banking institutions.