2023 may be a very exciting year for the banking and financial sector. They are at thecrossroads of transitioning into bigger digital entities with better presence virtually. Theneed for digital transformation may be several, like lowering costs, improving compliance,etc., but 2023 will also be a year when banks and financial institutions will witness themassive growth of strategic compliance for processes, people, and if possible, the bankingservice provider.It is important for retail banks to have a clear idea of what they can expect in the comingyear and make plans accordingly. On this note, let us explore five top retail banking trendsand predictions for 2023 and how banks can keep up their competitive spirit in the holidayseason.
Neobanks will continue their dominance
In 2023, we will see neobanks continue their dominant growth when compared totraditional banking players.Studies estimate that neobanks will exhibit nearly 53.4% CAGR every year presently.However, established banks are now slowly realizing the need to perceive neobanks astheir allies and not competitors. This will result in more neobanks being developed anddeployed on top of the existing digital banking infrastructure of leading banks. It will leadto consumers getting more accessible banking services via just their smartphones.Countries like India will lead the world as more consumers are digitally savvy and there areplenty of online financial and credit finances.
Cognitive automation
More internal processes and workflows that banks leverage for their daily functioning willbe automated in 2023. Automating areas like trade finance, bill settlements, orchestratedpayment options, etc. will ensure that there is uninterrupted service for end customers,irrespective of whether they interact directly with the provider’s application. By startingsmall initiatives and growing them progressively, we can ensure that there is minimalwastage.
The explosive growth of embedded finance
In the past, big-ticket purchases at appliance stores or auto dealers were financed throughbanking points present within those stores or showrooms. This was the beginning ofembedded finance wherein financial services or products were sold as part of the customerjourney in a non-banking business. As we move into the new year, embedded financialservices will take a significant leap forward in not just high-spending avenues, but acrossseveral digital and physical consumer services. Banks and financial institutions willempower a range of businesses to transition into localized distribution points for theircredit services. From a local food delivery app allowing in-app payments to a clinicspecializing in hair transplantations offering attractive EMI options for patients, consumers
will be able to leverage credit facilities across several businesses that will be backed bybanks.
Experience-driven banking
As more millennials and digitally savvy consumers begin to flock to markets, banks willcertainly need to upscale their services to meet new and dynamic needs. In 2023, a keyfocus area in this regard will be the large-scale adoption of experience-driven bankingservices. In simple terms, experience-driven banking refers to engaging customers byproviding not just a specific banking function but an experience that they will love toreturn. This would require banks to have a very flexible technology stack and architecturethat empowers easy adaptability with 3rd party digital services.
Rise of BaaS
In addition to the concept of embedded finance we covered earlier, the widespreadadoption of Banking as a Service or BaaS will be witnessed in 2023. In the BaaS route,banks only need to deal with delivering their banking infrastructure via a web access pointand 3rd party businesses can build innovative digital services around the bankinginfrastructure. It can help in taking better and more attractive products to the market. BaaSwill be pivotal to the growth ambitions of several banks as they can leverage the richdepository of customer data from 3rd party services and evaluate the creditworthiness ofpotential customers to help win deals faster.
Contextual personalization
We already know that personalized experiences are key to success for any business,including those in the banking and finance sector. But simple personalization hacks andtechnology implementation is old school as there is a rapid adoption of AI and machinelearning-powered contextual personalization opportunities. In simple terms, contextualpersonalization refers to a personalization initiative that aligns with the functionalperspective of the business.In 2023, we will witness a deeper integration of banking and financial services with thedigital economy. However, banks and financial institutions need expert guidance inselecting the right partners for extending services. In addition, they also need to have theirdigital backbone built resiliently and reliably which would mandate the implementation ofadvanced and emerging technologies like cloud, AI, etc. This is exactly what Verinite doesfor your business. Get in touch with us to learn more.
Sankhadeep Chakraborty
Sankhadeep heads the engineering arm in Verinite. He has been associated with the BFSI domain from the start of his career. He is a hardcore techie and innovation drives him. He believes in the saying "Nothing is impossible"