By Tariq Zaid, CEO and Co-founder of Cheddar
As we find ourselves living in a world of ever-changing global challenges, the future of banking over the next 10 years will no doubt look very different from today.
Digitisation of banking
With banking apps increasingly taking the place of in-person visits to the local branch, personal devices such as smartphones will greatly shape the way consumers manage their money. Bank cards will be a thing of the past, making the smartphone a major player in how consumers interact with financial goods and services.
Handling cash, once a defining feature of banking, will also be phased out. All, if not, most, money will be digital. According to UK Finance, only 17% of all payments made in the UK were cash payments. That figure is expected to decline further over the next decade, which leaves ample room for digital payments to take precedence over all other forms of payment.
In tandem with this, the next 10 years of banking will likely do away with all finance hardware. Banking activities, from payments to savings, will be conducted online using software and will be further optimised to enhance the customer experience.
Trending customer needs
Moving away from legacy banking systems will create an increased appetite for frictionless and more personalised banking. Consumers do not want to wait for payments to clear or get generic service offerings that do not suit their needs. All financial services will need to be fast but tailored, otherwise consumers will vote with their feet and will take their money with them.
As such, the future of banking looks to be one of complete ease and inclusivity, without the need for consumers to meet specific criteria all the time. Sending money to friends, recuperating group expenses or even just splitting a bill will become the norm as peer to peer payments will be seamless regardless of where they bank.
Another change to look out for will be the fight for consumer retention and engagement. Established banks have long enjoyed consumers flocking to their services, but now challenger banks such as Monzo and Revolut have given consumers greater financial choice. This will mean increased competition between banks and generous reward systems to ensure customer loyalty.
Over the next decade, we will also likely see more regulated ‘buy now, pay later’ services and should expect to enjoy greater flexibility that suits every day life in our banking experiences.
What Gen Z want from banks
With severe disruptions to their education and entry into the workforce, Gen Z are arguably the most economically fragile compared with previous generations. Gen Z will need banks who will cater to their unique pain points as they face their first recession.
Gen Z desires banks that won’t penalise them for their lack of financial knowledge or stability. They want banks that are sympathetic to their financial and personal goals. A bank to this generation will not just be where they store their first paycheck, but will be their own personalised financial guide.
We will see the banking sector face an increased push for innovation and this generation will be quick to give their feedback. Banks behind on innovation will lose out on having Gen Z customers and will struggle to entice them away from competitors.
This generation wants to know; will you make a decision on what I can do today, tomorrow and not my past?
As they face the most financially challenging times in recent history, Gen Z will turn to services that will make their financial lives easier. Gen Z wants to save whilst they spend; looking to services, such as cashback offerings, that will not require them to greatly alter their consumer habits. Gen Z needs to navigate the cost-of-living crisis but not at the expense of their wellbeing.
The next decade of banking
As time goes on, we will see a bold shift away from legacy banking processes to new hyper-personalised experiences. Fintech innovation is already improving business to consumer (B2C) and consumer to consumer (C2C) payments, boosting the financial economy – we can expect this trend to continue.
As digital natives, Gen Z are tech savvy enough to adapt to the changes we foresee over the next 10 years. They will take full advantage of opportunities to make and save extra money using technology and social media content.
Our personal mobile devices will take on an even greater role in our everyday life and will determine our engagement with financial services. As a result, we know that the next 10 years in banking will be greatly shaped by technological innovation and exciting developments in the world of finance. Watch this space.
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FAQs
In tandem with this, the next 10 years of banking will likely do away with all finance hardware. Banking activities, from payments to savings, will be conducted online using software and will be further optimised to enhance the customer experience.
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By Tariq Zaid, CEO and Co-founder of Cheddar