Kevin Tweddle: 5 retail banking predictions for 2020

The beginning of the new year is the perfect time to look ahead to the future of community banking. While forecasting the future is a tricky business, I enjoy the annual practice of making predictions for the year ahead with an eye toward how community banks can leverage technology to improve the customer experience. Here are five hot topics community bankers should follow closely in 2020:

  1. Open banking will take a step forward. Open banking gives third-party financial service providers access to customers’ financial data through application program interfaces (APIs). As data sharing occurs, look for more bank and fintech partnerships, which should translate to lower costs and faster, more secure and easier integration for community banks.
  2. Financial literacy and education will gain traction. We will see financial literacy and education tools embedded in nearly all aspects of financial services. Customers are looking for guidance on how to manage their financial lives, from saving and investing to spending and paying bills. I expect to see more solutions that address this issue in 2020.
  3. The battle for the next generation of customers will heat up. As digital natives, Gen Z (whose oldest members were born in 1997) will challenge banks to improve and enhance their digital experiences. Expect more solutions like P2P payments and financial literacy tools targeted to this tech-savvy demographic as they enter the workforce. This trend will accelerate significantly in the year ahead.
  4. We will see a heightened focus on customer experience. The emphasis on customer experience is growing, and I expect to see fewer, yet more customized, interactions with customers. Data and analytics will enable community banks to deliver a more personalized customer experience, from tailored offers to self-service options. Simplicity is king, especially when it comes to digital tools. Digital experiences, including onboarding, will be simpler, with an increased focus on reducing friction in the process.
  5. Banks will add more of the human element to the digital experience. Digital solutions have been a critical focus of community banks for a while, but expect the pendulum to swing back to human interactions in 2020. Digital solutions work well for routine functions like making a deposit or transferring money, but when it comes to major financial decisions, such as obtaining a loan or planning for retirement, customers still want to talk with a real person. Community banks understand this intrinsically and will continue to seek the right balance between high tech and high touch. Digital experiences, as innovative as they can be, can be commoditized. The human element, however, always will be a critical differentiator for community banks.

Kevin Tweddle (kevin.tweddle@icba.org) is chief operating officer of the ICBA Services Network

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