What Trends Will Mark Digital Banking in 2023?

Digital business models will shape the future of the banking industry. In fact, digitization is already driving changes in customer behavior and preferences for many traditional financial services. Banks are under increasing pressure to transition to become digital first organizations to remain competitive.

By 2023, many banks will transform into technology companies that will offer digital solutions by leveraging their broad customer base and distribution channels.

What Digital Banking Technology Trends Will Shape the Future of Digital Transformation in the Banking Industry? 

1) More Consumers Will Prefer Digital Channels

More and more consumers prioritize digital solutions when choosing their financial provider. Not only because they want to see what products you offer, but also because they prefer to use digital channels (for example, online/mobile banking) instead of traditional contact channels (for example, in the branch bank or by phone).

This digital banking trend will continue to increase in the future, leading many banks to close branches as they strengthen their “digital maturity”.

2) Banking Is Becoming a Customer Experience-Oriented Industry

In the future, customer experience (CX) is expected to be a key differentiator for financial service providers both in terms of branding and attracting and retaining customers.

Thus, many banks prioritize CX during their digital transformation, ensuring that the solutions they design meet all customer needs in terms of convenience, security, comfort, and engagement.

In 2023, the ability to anticipate customer needs, deliver personalized experiences and great CX will be set apart as a competitive advantage in the banking industry.

3) Open Banking Facilitates Transactions on Digital Platforms

While the Open Banking API is still in its early stages, it promises to transform banking, as we know it. Open APIs allow banks to share data with external service providers, known as Fintechs. These apps are making transactions easier, faster, and more secure through digital platforms.

Open APIs are expected to facilitate the exchange of data between financial institutions, third-party service providers, and customers. The resulting integration could result in faster innovation and better customer experiences (CX) for banks and consumers.

However, security will be a major challenge for them, as financial institutions need to ensure they can provide the necessary protection for customer data without slowing down their workflow. For example, adding time-consuming manual verification steps during the API process might require additional security measures.

4) AI Will Make Banking Smarter with Chatbots and Virtual Assistants

By 2023, Natural Language Processing (NLP) will be the norm for customer interaction. The rise of chatbots and virtual assistants is already having an impact across industries, but it’s their adaptability that makes them truly valuable in banking.

Banks need to leverage this technology to deliver exceptional CX by giving customers automated answers to frequently asked questions, reducing call center volume, and freeing up staff time for value-added tasks. By 2023, these technologies will become the norm in banking apps on most devices, including smartphones and tablets.

5) Digital transformation Will Lead To a New Wave of Competition

The digital transformation of traditional financial service providers has led to the arrival of a number of new players offering solutions such as robotic advisors, peer-to-peer (P2P) lending platforms, and digital wealth management tools. Open banking APIs that allow customers to seamlessly manage more than one account through digital self-service channels has fueled these initiatives.

Fintech companies were among the first to introduce digital innovation in many areas, such as payments, loans and transfers. Many of these startups have now become major competitors to the banks as they expand their services and customer bases.

Banks are already partnering with Fintech companies to drive their own digital transformation initiatives and keep up with the startups that are successfully revolutionizing the banking industry.

6) More People Will Feel Comfortable Banking on Their Own

The banking industry is increasingly customer-centric. As digital transformation progresses, many self-service offerings will be available at a bank branch or ATM, allowing customers to open accounts quickly and easily without having to visit the branch bank.

The rise of digital banking is leading to better CX through enhanced self-service capabilities, faster account opening, more secure transactions, and broader accessibility. Thus, the resulting increase in customer engagement has helped banks generate new revenue streams through cross-selling of financial products.

By 2023, automated processes across the board are expected to transform service quality, with self-service tools powered by advanced analytics helping customers make faster and better-informed decisions.

7) Digital Banking Will Focus More on Big Data and Predictive Analytics

With Big Data, banks will put customer behavior at the center of their business models as they can provide more personalized services and improve sales by taking full advantage of predictive analytics.

In the future, successful digital transformation will depend on how much a bank can learn from its customers. Analytics will become essential in customer acquisition efforts, as well as market segmentation and cross-selling.

As a result, banks will have better intelligence on consumer behaviors and spending patterns, which can help them, develop targeted products and services.

By 2023, Big Data and predictive analytics will allow banks to gain a 360º view of customer needs, offering them contextually relevant information on discounts or personalized offers.

8) Banking Apps Are Becoming Smart Digital Assistants for Customers

By 2023, banking apps will shift from being mere self-service tools to customer relationship management platforms that anticipate consumer needs and offer personalized advice based on their financial situation.

The banking app will become an “intelligent digital assistant” that will be able to understand consumer needs and preferences based on their financial behavior over time. For instance, if a customer always transfers money to their savings account on payday, but forgets to top up their payment card with funds for the next month, the smart application will be able to predict that they will need to do so soon.

In this way, the intelligent assistant takes proactive steps by communicating with the customer and suggesting what they might want to do before they even know it.

It is expected that in the next five years, customers will be able to access different types of digital banking services more easily than ever before.