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By Monica Hovsepian, Financial Services lead, OpenText

Despite the static nature of the industry, for generations, many customers have been showing their traditional, family banks undue loyalty. Not only were the big players in the traditional banking scene offering much the same in terms of features and benefits, but the manual admin side of switching banks was simply too much of a headache for most.

In the 2010s, however, everything changed. Over the last two decades, technology has been evolving so rapidly that banks have witnessed the arrival of new high-tech competitors that are threatening their dominance.

Challenger banks, big techs and  fintechs are shaking up the traditional banking landscape and are driving change within the industry. They’re able to go further than traditional banks to meet customers’ needs and decipher some of the complexities surrounding financial products and the industry. This has set a new standard for what customers can expect from their bank in terms of services.

For many consumers, however, it would seem attitudes towards digital banking are not evolving as rapidly as the technology underpinning it. Studies have found that there is still significant distrust towards fintechs – with only 14% of people trusting a fintech company to securely link with their primary bank account. Therefore, despite the narrative around fintechs, this would suggest that the game is still all to play for if traditional banks can further transform their offering and services.

We’ve seen astronomical change in the banking sector over the last decade and we can expect to see this transformation continue. Though it’s impossible to say exactly where the financial services (FS) industry will be in the next ten years, here are some the top priority areas for banks and where can expect to see the most change.

Gen Z has joined the chat

In the coming years, one of the great challenges FS organisations will increasingly face is addressing the priorities of Gen Z – not only as they become consumers in their own right, but also as they enter the workforce.

This generation has a completely different mindset to Millennials or Boomers, and it’s therefore essential to consider their needs. When it comes to their finances, notably, less than half of Gen Z admit to having an account with a traditional bank, credit union, neobank or fintech. In contrast, 8 out of 10 Gen Zers use social media on multiple occasions throughout the day, while more than two thirds of Gen Z admitted to getting financial advice from Tik Tok or YouTube.

To attract and retain Gen Zers, banks will need to develop products that offer value, are authentic and educational – catering to Gen Z’s desire to learn innovatively – and are tailor-made for this audience.

Addressing the Total Experience

Another factor that is becoming of increasing relevance is Total Experience – which Gartner is referring to as TX. We see this as the combined offering of the Customer Experience (CX) and the Employee Experience (EX). The goal is to improve the overall experience, breaking down siloes while integrating technology with employees, customers, and users. TX is the differentiating factor for businesses, able to give them a competitive edge.

In today’s digital age, we’re using so many different channels in both our work and personal lives, and consumers are increasingly aware of the digital trail their data is leaving. This is understandably leading to questions around how their data is going to be used. FS organisations need to reassure their customers, whilst using this data to deliver smart and relevant engagements back to the user. The banks which can do this most effectively are going to see the most success. This will be achieved by implementing further, smart digital transformation customer journeys and the use of appropriate Artificial Intelligence (AI) and Machine Learning (ML) capabilities to continue innovating.

There’s no denying that the FS industry isn’t going to change overnight. In the short term, however, we can expect to see banks pivoting to address common customer concerns, such as those around the rising interest rates and cost-of-living crisis. In general, we should anticipate banks shifting to become more proactive and empathetic towards their customers, especially in the face of great financial and societal uncertainty.

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