UK bank financing triples UK annual CO2 emissions | Banking

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We are witnessing an evolution. Banking services are changing in many ways – the move away from cash and even cards, the urgent adoption of online banking and a growing interest in personal investments. The slow and steady pace of the industry has accelerated more in the past year than in the entire previous decade.

The results of this transition are already becoming visible: the Treasury has increased the maximum contactless spending, hundreds of bank branches such as HSBC and M&S Bank continue to close, and a record number of people are opening investment accounts. , with Hargreaves Lansdown report a 40% jump at the end of 2020, reducing its average investor age to seven years. Likewise, competing platform AJ Bell has also seen its customer base grow by 30% last year, to nearly 300,000. More than half of its new users are under 40.

All of this will upset the status quo, once again putting customers at the center of the banking industry. It is becoming increasingly clear that over the next decade, banking services will be put back into the hands of citizens – so by 2030, what will our banks look like?

Power to the people

The digitization of the banking sector has also been its democratization. The fairly recent introduction of user-friendly mobile banking applications has reduced the distance between customers and their money. This is an indicator of a larger financial trend: most people now want to be actively involved in their finances. Customers want a bank they see as ‘theirs’, hence the success of challenger banks like Monzo and Starling, where personalization and ownership are built into every interaction.

But it goes way beyond mobile banking apps and annual expense reports. Banks have the opportunity to capitalize on this desire for a more involved bank, by creating new products and services that support their customers 24/7. May this change materialize through actions and trading platforms, broader mortgages, loan and credit card offers, loyalty and voucher programs, or even buy now, pay later (BNPL) services, one thing is sure: by 2030, banks will certainly be. more of our daily lives, by offering products and services that converge to improve all of our lifestyles, not just our finances.

Of course, to make this diversification a reality, the technical foundations must be laid soon. For challengers like Monzo and Klarna, whose batteries incorporate the latest technology and digital realms, they may be able to move faster. But traditional banks also have a unique opportunity: to make the most of their huge cash reserves and loyal customer base.

The best of both worlds

First, banks don’t need to upgrade their entire technology stack to deliver more services to customers. While there will always be natural competition between the old and the challengers, the banks of 2030 will exist – and work together – in a much more harmonious way.

Many customers will probably already recognize the advantages of both types of banks – the big High Street banks are reliable and have better lending power, while upstart young people, with more mature digital platforms, will use AI to quickly approve loans and humanoid robots to provide efficient services. customer service. In a decade, however, that won’t be a choice customers will have to make. Instead, these benefits will be consolidated by open bank. Banks will actively pull data from other bank accounts and customer profiles, collaborate on products and services, and work in tandem to give consumers the full visibility they demand. This will allow them to slice and slice the benefits of each bank as they see fit, based on their individual lifestyles.

Innovate from the outside to

That said, as competition between new and old continues to intensify, the big banks will have no choice but to continue to innovate. In the past, when banks innovated, they did so from within. This has often created a disconnect between the product, the process and the platform; ultimately diluting the impact of the changes they make.

For the bank’s innovation team of 2030, this approach will be reversed. New products and services will be customer driven, not the other way around. First of all, the extraction and analysis of customer data will be essential for this. From social media, expense history, and a growing number of other data sources, customer behavior mapping will become increasingly accessible to innovation teams. Making sure this information is put to good use will be the differentiator between those who sink and those who swim.

To enable this outward approach, there is a need to move from the siled development teams that currently exist to a global, enterprise-wide innovation center. This could mean a chief innovation officer – a role most banks don’t have in their boardrooms – or a team of creative and innovative thinkers who sit across the company, fueling product programs. , informatics, transformation and CX. Putting customers first will depend on finding the right people to get it right, who will build innovation into every decision.

The first stages of change are often the most difficult, and we have seen the legacy, the High Street banks suffer because of it. But the future of banking looks bright for the most important part – the customer. The democratization of banking, whether through increased control and visibility of finances or technologies that will provide a 360-degree boost in our daily lives, will be a key marker of progress. By 2030, banking should be for everyone. It is up to banks, large and small, to make this a reality.

This article was contributed by Venkatesh Varadarajan, Financial services partner, Infosys advice



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