2021 brought a lot of change to the world of finance and banking, from the implementation of Brexit to the popularization of cryptocurrency. Today, banking looks very different from how it did only a few years ago, and these shifts do not show signs of stopping anytime soon, especially in a world that is still dealing with the COVID-19 pandemic.
To stay current, banking professionals need to keep a finger on the pulse of upcoming trends, particularly since the rate of digitization seems to be increasing at an exponential rate. Understanding trends can help bankers keep on top of what customers are going to expect in the months to come. Some of the key trends in banking for 2022 include:
1. Collaboration over competition
Fintech and banking startups have become popular endeavors across the world. These small companies are putting a lot of pressure on the larger traditional financial firms to rethink the services that they offer. Because of the competitive landscape that exists, firms are thinking about how they can work together with startups rather than compete. Most people want their banking through a single provider, so both startups and established firms stand to benefit from collaboration over competition. Established firms gain access to new and exciting technologies that customers want while the smaller companies benefit from a larger, well-known name. Integration of services will likely become a major driver of the market moving forward with collaboration pushing innovative boundaries.
2. Growth in digital banking
Banking industry professionals have seen this trend coming for a long time, but 2022 seems to be the year that digital banking could become preferred to brick-and-mortar options. In the near future, brick-and-mortar banks will need to adopt digital options to remain competitive. The move toward digital is driven by several different elements. First, processes that were formerly necessary to be done in person are now obsolete or easily digitized, such as access rights to payment rails. Second, COVID-19 has raised people’s expectations about what they should be able to do from the comfort of their own home, including banking. Third, the pandemic has also forced companies to adopt expanded digital security measures and figure out workarounds for processes that were formerly done on paper. All of this means that banks—more than ever before—are expected to have digital services.
3. Emphasis on financial education
Many people in the banking industry are trying to figure out how to attract members of generation Z. This is the youngest banked generation and an especially important segment for bankers, as millions of them enter adulthood each year. A recent report asked gen Z what they want out of a bank and the answer was financial education. About half of the respondents said they would be more likely to visit a bank branch that offered drop-in financial advice, and 40 percent said they wanted financial education sessions. This generation has seen what a lack of financial education has done to people older than them and want more opportunities to learn, especially at a young age. Banks that offer education as an important part of their services may more readily attract gen Z patrons, especially if they also have other unique services like a café and workspace, as well as access to innovative products like cryptocurrency.
4. Stronger virtual defenses
The options that people have for paying are expanding nearly every day. This means that more financial data than ever before is being transmitted. Unfortunately, some people are likely to try taking advantage of this fact. As a result, organizations need to be more alert than ever before to cyberthreats. Moving forward, it would not be surprising for larger banking institutions to join forces with startups that specialize in security to provide more peace of mind to their customers. Instances of fraud are already on the rise when it comes to online transactions, and new payment options becoming available in the new year will likely only increase this number even more. Customers are becoming more judicious in the ways they put their financial information on the Internet and will seek out banking institutions with the best protections.
5. Elimination of overdraft fees
In June 2021, Ally Bank rocked the banking world by announcing that it would no longer charge overdraft fees. This caused a chain reaction with many of the big players. PNC now has a service to help avoid overdraft fees, and Bank of America allows customers to transfer money automatically from other accounts to avoid overdrafts. Capital One also eliminated overdraft fees, and JPMorgan Chase changed its policy to provide more leeway to customers. These moves put a lot of pressure on other banks to make similar moves. While not all banks may necessarily eliminate overdraft fees altogether, reducing them or offering programs to help avoid them will become very important for attracting customers.