3 minute read
By Matt Tengwall
Posted in Customer Engagement
If there’s anything the banking industry has learned in 2020, it’s that innovation is the key to success. The physical and virtual worlds are integrating more every day, and technology is reshaping the future of the industry and customers’ expectations—a trend that accelerated as COVID-19 swept through the states.
To remain relevant (and successful), financial institutions of the future must embrace technology, remain adaptable to evolving business models, and put customers’ desires first.
Before the first wave of COVID-19, most technology wasn’t being fully leveraged by banks or customers. But now, with customers increasingly demanding more from their banking services, we’re beginning to see banks and credit unions leverage full capabilities of ATMs, institute fewer physical touch points and rely more on contact center and online/mobile interaction.
Though the decrease in COVID-19 cases has led many financial institutions to reopen their branches, the rapid adoption of virtual services will likely lead to a number of branch closures; in fact, some branches have already permanently closed, choosing instead to focus more on virtual interaction with customers.
This doesn’t mean that banks will disappear entirely; it simply means many financial institutions are freeing up resources to better virtually serve customers.
Considering the unforeseen circumstances of 2020, what does this digital transformation mean for the state of the industry? We will undoubtedly continue to see substantial industry changes and trends due to the pandemic. Rather than abrupt adoptions, we will start to see adjustments over time and once things get back to a sense of “normalcy,” the industry will get to a point where the “branch of the future” is taken more seriously.
Despite some branch closures, savvy financial institutions recognize that brick-and-mortar locations are still critical for sales—making it a necessity for some locations to combine the physical with the digital. Liken it to the “free-flowing Apple store;” in branches of the future, business coverage and how it is covered will continue to evolve: we will begin to see more self-serve kiosks, ATMs, financial advisors and mortgage experts in lieu of just traditional tellers.
From a pure technology perspective, the influence of the “cloud” is going to be impactful. The cloud is already utilized in the rest of the data capturing markets, but its full adoption in banks and credit unions is going to take around 10 years. Most of today’s cloud-based solutions are utilized for centralized management or remote viewing, but we will start to see the transition to cloud-based storage over the next few years.
The cloud offers numerous benefits for the financial industry, such as scalability, automatic updates, streamlined data sharing, and more. Over the next five years, the industry will adopt a hybrid approach wherein financial institutions take only the most important information and send it to the cloud.
This measured adoption is necessary for banks and credit unions because migrating to the cloud creates two key constraints: bandwidth and storage costs. For an institution with a significant number of locations (and therefore, an abundance of surveillance cameras), full migration of data from an on-premise location to the cloud would require a large amount of bandwidth that isn’t yet available.
Additionally, attempting to move all data to the cloud at once would be expensive and disruptive, even if there was enough bandwidth. So, it makes sense to transition over time as equipment becomes fully depreciated and technology (i.e., bandwidth) improves to enable this transition.
2020 has been a tumultuous year, but also one that poised the industry for tremendous growth. Powered by the digital transformation, the future of banking looks bright.
For help in navigating banking’s digital transformation, contact us today to leverage our fraud and security solutions.
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