From branch closures and smaller drive-through formats to more ATMs than bank tellers, it’s clear that traditional banking as we’ve known it is rapidly changing.
While the 65 and older generation is finally getting comfortable completing transactions online, the youngest generation has moved on to mobile devices. Overall, an American Bankers Association survey from September 2017 indicates that 4 out of 10 Americans do most of their banking online, and mobile banking ranks a close second.
Before we assume the trend toward online banking signals the slow death of traditional banks, let’s look at what finance industry leaders are seeing and predicting. Here are three personal banking trends we’re almost certain to spot as we move into 2018.
1. More Artificial Intelligence
AI has already crept into many financial services. For years, we’ve had voice-activated security features and online investment firms that function as “robo-advisors” — using algorithms and automated processes to predict which options are best for an individual based on their financial profile. Then there are newer AI uses like Alibaba’s MyBank, which even automates the loan approval process!
In the future, we’ll see this technology used even more extensively to help people track and advise their personal finances. Some think we’ll see more AI that functions like Google Home or Amazon Echo, but for financial management. These “digital financial advisors” will not only track and store your financial habits and preferences over time, but also make timely suggestions such as service provider changes or which credit card to choose.
2. More Fintech Companies and Services
A Bain & Company survey of 133,000 customers from 22 countries showed that U.S. consumers now rank their trust in tech companies like Amazon and PayPal to handle their money nearly as high as they rank traditional banking institutions. We’re also trusting these smaller companies with more complex online transactions than in the past, and big motivations are speed and convenience.
In the next year and beyond, expect to see more of these companies and more extensive digital financial services being offered to consumers.
3. Banks Turning into Community “Digital Experience Centers”
Many banks are becoming technologically outdated and lack convenience, but they continue to hold consumers’ trust. Even digital-savvy Millennials want the option of visiting a physical building, and 60% of banking products are still sold within four walls.
Still, things are getting tough for banks. As customers communicate more through digital channels, banks are laying off employees and moving to smaller venues. Besides competition from the explosion of agile financial service providers and technology companies dipping into finance, banks also face growing regulation.
We won’t see banks disappear completely, but they’re going to start looking a lot different. Some banks are experimenting with “digital experience centers” that are minimally staffed with advisors or transaction assistants, don’t have lines, and give people the self-service they want. Others are bringing in more of a community feel, with on-site coffee bars or even yoga classes. Whatever they look like, there will be more focus on personalization, accessibility, and innovation.
Overall, there’s a fundamental change in personal banking that will continue to drive these trends: control over personal data is shifting from the hands of banks and other institutions to the hands of the individual.
What do you think about these personal banking trends and what they’ll look like in the future?
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I’m in New Zealand.. and quite frankly we’ve been way ahead of the States regarding new technology in banking as far back as the early 80’s. One of the advantages of being a smaller westernised country is that we are used as a test bed for new financial services innovation. For example the eftpos system was trialed in NZ way back in the late 80’s or early 90’s as I recall. We certainly had ATM’s as early as 1985, possibly a bit earlier than that.
We are seeing a decrease in physical bank branches due to the uptake of online and mobile device systems. But there has been (still is?) pushback from members of the older generation who want/need to talk to tellers and managers in person. Especially in smaller areas and towns I see a resurgence of uni-branches in the future that will be manned by branch tellers on specific days from 1 location in a town. And seeing as there are 5 main banks in the country that would mean essentially one facility being used daily, but by different customers depending on the day. How the other smaller community based banks will function is anybody’s guess at this stage.
All the “Banks” in my area especially the regions branches have all gone to the small ATM with the micro-drive through. the only hard locations, meaning the branches with real people working inside, are closer into Birmingham
kind of crazy actually!