2018 Trends in Retail Banking: Navigating the Transformation

Retail banking remains a central touchpoint for consumers, even as the ways in which they manage and move money change. Escalating consumer expectations for speed and ease continue to transform the branch and banking. How financial institutions and our industry manage those shifts will be a growing focus in 2018 as new technologies and players begin to take center stage.

Digital self-service capabilities have led to fewer branch visits, but people still want to talk to someone when they have an issue or need advice. Now more than ever, financial institutions are tasked with balancing the desire for high-tech innovations with well-timed human interactions to create a positive customer experience.

The evolution of capabilities such as data analytics, machine learning and artificial intelligence will help financial institutions hit that sweet spot in the coming year and further transform the retail banking experience. With that in mind, here are three retail banking trends to watch in 2018:

1. Data Analytics Grow in Importance

   The use of data analytics will increase in 2018 as financial institutions seek to better understand their customers and gain useful insights into consumer behaviors. That will lead to more relevant conversations and applicable offerings – and a comfortable, efficient experience that consumers appreciate. Armed with the knowledge they are offering the right product at the right time to the right person, front-line staff and salespeople can cross-sell with greater confidence.

   

   Data analytics can also reveal new ways to address key market segments or solve existing or potential problems. Many organizations are just beginning to get their arms around the data they have at their disposal. Look for data-driven organizations to take even deeper dives into available information to expose trends and provide additional insights. That level of analysis adds value to artificial intelligence capabilities and machine learning, which enables computers to act without being programmed.

2. Artificial Intelligence Gains Ground

   Although artificial intelligence isn't new, the industry seems to be turning a corner toward more widespread acceptance and usefulness. In its broadest terms, artificial intelligence technology manages tasks previously believed to require skills only humans possess, including the ways people reason, use language and build on established knowledge, to get smarter over time.

   That has set the table for artificial intelligence to fuel new capabilities and enhance existing customer journeys. For example, it can strengthen fraud detection capabilities by spotting any transactions beyond normal behaviors and patterns. Artificial intelligence could also enhance front-line support by handling basic inquiries and maintenance tasks and increasing the speed and accuracy of traditional data analytics to provide real-time, actionable recommendations for consumers.

   Consumers are growing more comfortable with artificial intelligence, from getting advice and information from Alexa to the idea of using self-driving cars. This is especially true for digital natives, born after widespread adoption of technology. Financial institutions have an opportunity to build comfort and trust in their bank or credit union's technology, creating an almost familial connection between consumers and an organization's digital brand.

3. Consumer Expectations Continue to Evolve

   People expect ease and convenience in financial services, and those expectations increase every day. Yes, millennials are changing how we manage and move money, but the next generation – Gen Z – may be just as transformative.

   Digital natives seem to be more comfortable than other generations interacting with chatbots and connecting via video. Raised with mobile devices and social media, they're well-versed in digital technology and accustomed to a continuous flow of information, all factors that will influence how and where they bank. While most prefer to bank through digital or electronic channels, more than a third express a preference for face-to-face interactions, according to recent research from Raddon, a Fiserv company.

   No matter the generation, people will continue to explore new ways to do business with their financial institutions. Look for branch traffic to decline as most transactional activities move to digital channels. Branches will instead become hubs for advisory services and more complex transactions, which means financial institutions will need to make sure the right people are in the right positions to help consumers.

What to Do Now

What can your financial institution do to meet the challenges and opportunities ahead? Your approach to implementing new strategies and capabilities is influenced by asset size, aspirational goals and your customer base.

With that in mind, I challenge you to do more in 2018. Try something different. Set goals for migrating transactions to digital channels. Think differently about the experience you provide and how you can meet changing, complex consumer expectations. Standing still is no longer an option.