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The global banking industry is in the middle of a transformation right now; new players are joining the competition from unexpected sources and all players, old and new, are being forced to innovate and consider which trends will carry them forward into the future. Here are five of the most important for today’s banking leaders.
Cloud processing offers banks a host of benefits: an increased capacity for data, added agility, and additional security. Cloud processing and storage can also offer cost savings since banks no longer have to pay for the cost of IT infrastructure – they simply pay their outsourced cloud processing provider for the data storage they use on a rolling basis. Beyond saving money, this also helps add predictability to the costs of data storage.
Cloud processing has its challenges, however. For many banks, cloud processing may not be an option due to regulatory concerns, which usually include matters surrounding the storage of client information, how the data is used, and the security/visibility of this data to outside parties.
More and more, banks are using their vast stores of client data to serve up targeted, customized offers to their clients. In this space, the larger, more established banks have an advantage over the smaller startups; they simply have more data from which to pull relevant information to serve up offers that matter to their clients. Make no mistake though: large or small, this is not a trend any bank can ignore. Companies such as Amazon and Starbucks are raising the bar for organizations across all industries as to how customer data is used to improve their overall experience with the brand. It’s become an expectation, not a point of differentiation for clients to have some measure of personalization from their bank. One of the benefits of outsourcing personalization to a company like Swivelt is we know what trends and patterns to look for in the data. Having provided analytics support to Fortune 500 organizations for over 20 years, teams like ours can often save your company money while also arriving at a top-notch strategic outcome.
Beyond being partners to some banks, payments processors are now also some of their greatest competitors. Aggregators such as Paypal are challenging banks from both a service fee and access to data perspective. This data is key to being able to deliver on-trend payment services, and there is currently a tug-of-war taking place between banks and payment processors over who controls the customer transaction data. The winner of that battle will benefit tremendously.
In an era where the vast majority of people bank online anyway, savvy players in the market have entered with zero physical footprints, allowing them to keep costs down and offer more lucrative promotions and interest rates, while still providing comparable levels of service to banks with physical branches. These organizations are especially enticing to younger generations like Millennials and Gen Z, who rarely set foot inside a physical branch anyway. The promise of higher interest rates and lower fees is a difficult one to ignore. Larger banks need a two-fold strategy to combat this: they need to demonstrate both superior value (i.e. greater customization and personalized offers) and smooth digital experience, even as branches continue to exist.
According to a recent survey, 71% of banks are investing in cybersecurity, yet only 17% are thinking about risks as it relates to third-party relationships and open banking. These risks are a prime concern for many regulators. Banks need to consider how they will protect client information while engaging in such relationships.
The banking industry is evolving at a pace more rapid than any period we’ve ever seen in history. Institutions that fail to acknowledge and adapt to the trends we’re seeing right now in the marketplace run the risk of being left behind.
Swivelt offers expertise and outsourcing services in banking IT security, sales, support, and data analytics. With over 20 years of experience delivering services to Fortune 500 companies worldwide, we are experts in managing the full customer life cycle and optimizing business support functions to efficiently scale with your ever-changing business needs. Contact us to learn more about how our services can benefit your organization.