Banks to move online and form customer-centric digital ecosystems

Global banking executives believe that the branch-based model will die out.

COVID-19 branch closures, new technologies and increased competition from fintechs, super-app platforms and tech giants have accelerated digital transformation and triggered a shift in banking priorities and business models.

Temenos the banking software company, finds that 65 per cent of global banking executives believe branch-based banking will be “dead” within five years. The report written by the Economist Intelligence Unit (EIU) entitled “Branching out: can banks move from city centres to digital ecosystems?”

The report highlights how new technologies such as cloud, AI, and APIs as the trend that will have the biggest impact on the sector over the next four years, ahead of regulation and changing customer demands.

Aalishaan Zaidi global head of digital banking at Standard Chartered said the change in attitude and culture as a result of the pandemic.

“The big shift for us was our belief that we could change fast if we really wanted to, “Zaidi added. “We would have never done the partnerships we are doing now.”

About 81 per cent think unlocking value from AI will be the differentiator between winning and losing banks. Banks are focusing their technology investment on cybersecurity, AI and cloud computing as they accelerate digital transformation projects.

The report finds that 81 per cent of bankers believe banks will seek to differentiate on customer experience rather than products.

With this, many established banks are turning to strategic partnerships and investments in technology to become trusted banking partners and the purveyors of consumer-friendly banking experiences.

The pandemic has been a catalyst for collaboration and experimentation. The report states that nearly half (47 per cent) of bank executives expect their businesses to evolve into ecosystems in the next two years, whereby banks offer third-party products and services, together with their own, to customers and other financial organisations.

The report also shows how the pandemic has emphasised the societal role of financial services. Findings show that bankers view microfinance for entrepreneurs (34 per cent) and accounts for the unbanked (33 per cent) as the most promising inclusion-related business opportunities.




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