Like most industries, banking has seen its fair share of ups and downs over the past decade. Whether it’s the recession, the slow-but-steady recovery, or the introduction of new technologies, how financial institutions and people manage money has shifted significantly. Big and small disruptions, many driven by technology, will continue to shape the banking industry in 2017 and beyond. We’ve put together some predictions from industry experts on what you might see.
Regulation Uncertainty
While it looks like some previously-enacted regulations could be overturned, consulting firm Deloitte says banks should not count their chickens just yet. The company points out that the new president’s victory was based on a populist message, and banking scandals like the recent Wells Fargo cross-selling could leave Americans distrustful of banks. In a recent white paper covering banking’s near-term future, Deloitte notes that “Culture and conduct risk will be major agenda items for boards and executive management.”
The Fintech Challenge
Moving forward, fintech looks to be focused on increased automation and wider acceptance. Fintech companies will continue to disrupt the traditional relationship between customers and their banks, with organizations like Paypal and Venmo having an ever-bigger impact on how people pay for things. John Perry of Bluefin Payment Systems sees this being a major issue with younger generations who are no longer willing to stand in line at bank branches. Look for banks to collaborate with fintech companies that can help them meet these modern needs.
Paper’s Last Hurrah
Crystal Stranger, EA, President of 1st Tax and the author of The Small Business Tax Guide, predicts that, due to their inherent risk for fraud and identity theft, paper checks will be phased out. She believes the U.S. will start adopting more European approaches, much as it did with chip cards. Today, key fobs that generate random passwords are commonly used in Europe and make online payment extremely secure.
Bitcoin Will Continue to Disrupt Currencies
Several experts predict that Bitcoin use will explode in the next five years. Charlie Youakim of payment platform Sezzle believes that, as we move towards a more cashless society, demand for Bitcoin will rise, pushing up its valuation. He firmly believes Bitcoin will soon make the transition from gray market to mass usage, a bold but not unfeasible possibility.
The War for Banker Talent
Some industry insiders say banks face a growing need for highly-skilled advisors to help guide customers through uncertain times that demand complex solutions. In a recent article for Business Insider, Donald Raftery, Managing Director at Greenwich Associates, discusses how most leading banks are now shifting their strategies to have staff take on a more advisory role with customers. He believes the shortage of bankers who possess an advisory skill set – which can take 10 years to develop – will lead to fierce competition in the search for talent.
Artificial Intelligence (AI) for Better Customer Relationships
There’s no doubt AI will be embraced by banking institutions and customers alike. People already welcome AI into their homes in the form of Alexa and Siri, and banks will use the technology to tailor advice to each customer’s specific and complex needs. Most experts agree that higher-value clients will still be relationship-managed, but digital self-service AI advisory interfaces will become standard for most customers.
Conclusion
The future for financial institutions is ripe with opportunity and challenges. Are you prepared to respond to a new regulatory environment, rapidly-rising technology expenses, advisory opportunities, and the need for highly-qualified talent? In a rapidly-changing industry, one thing is certain: legacy banking players must update and improve their offerings if they want to stay ahead.