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Top Trends in Retail Banking: 2021

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The banking industry’s resilience is being tested as banks navigate through a remarkable 2020 filled with uncertainties. The impact of COVID-19 has been about setting the tone for future operational models. Retail banks have shifted focus towards integrated risk management with a more holistic view of operational risks. Adapting to the new normal, banks have prioritized cost transformation while engaging customers virtually. Incumbents sought to be more responsible within fast-changing environmental conditions and ESG remained a critical focus.

To provide more experiential services, banks are leveraging techniques such as segment-of-one to hyper-personalize offerings while aiming to humanize digital channels for increased engagement. Banks are also revamping middle and back offices, going beyond the front end leveraging intelligent processes. Open X is enabling banks to play on their strengths and use the expertise of ecosystem players. Going forward, banks are poised to become an enhanced one-stop shop by providing consumers value-adding FS and non-FS experiences.

To acquire customers in cost-effective manner, retail banks are tapping value-based propositions ‒ such as POS financing and mortgage refinancing. Further, Banking-as-Service provides incumbents a way to provide their high-value offerings to other players. In preparation for the future, banks will be looking to improve their go-to-market agility by leveraging the benefits of cloud. This analysis outlines the top 10 trends in retail banking for 2021.

Publié dans : Technologie
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Top Trends in Retail Banking: 2021

  1. 1. Top Trends in Retail Banking: 2021 November 2020 Link: https://www.capgemini.com/top-trends-in-2020/
  2. 2. 2© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Top Trends in Retail Banking for 2021 by Capgemini Banks can reduce fraud with end-to-end value chain optimization Banks leverage segment-of-one marketing to hyper-personalize offerings Humanizing digital experiences will foster more authentic customer connections Non-financial risks accelerated by the pandemic require robust strategy, oversight COVID-19 pushes cost transformation into overdrive ESG boosts responsible banking and resiliency Business resilience Customer centricity Intelligent processes Open Ecosystem Go-To-Market agility Banking-as-a-Service exemplifies Open X potential Tomorrow’s frontrunners will offer consumers convenient one-stop shops Banks tap low-interest, no-friction, value-based offerings to energize customer acquisition Cloud’s silver lining ‒ business agility
  3. 3. 3© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Trend 1: Non-financial risks accelerated by the pandemic require robust strategy, oversight Source: Capgemini Financial Services Analysis, 2020 Catalyst Prone to human error, internal legacy systems are at the root of an alarming increase in NFR- related losses Banks will strategically adopt integrated risk management techniques that equally consider financial and non-financial risks Fluctuating external conditions ‒ lockdowns and third-party risk may accelerate NFR incidents Service providers that simplify and manage NFR effectively will be in demand To manage compliance risks ‒ reputational, data leaks, and third-party ‒ banks are scrutinizing their outsourcing assessment methods Banks will retain lessons learned after COVID-19 and more diligently assess third-party outsource partners Impact Top Trends in Retail Banking for 2021 by Capgemini
  4. 4. 4© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Trend 2: COVID-19 pushes cost transformation into overdrive Source: Capgemini Financial Services Analysis, 2020, ABBYY Case Study-DBS, “ABBYY Mobile OCR Makes On-theGo Loan Approval a Blast, Emerj, “AI in Banking – An Analysis of America’s 7 Top Banks Traditional players are pushing for cost transformation amidst the pandemic Banks leverage cognitive document automation (CDA) using OCR (optical character recognition) to tackle paper-based documentation challenges, cut costs, and boost CX Traditional players shift to AI-automated bots to process various data types to optimize costs while engaging with customers on the front-end for experiential transactions DBS adopted ABBYY Mobile OCR to offer Quick Credit, a mobile app that allows DBS customers to apply for loans on the go JP Morgan‘s Contract Intelligence (COiN) chatbot analyzes legal documents and extracts essential data points and clauses Top Trends in Retail Banking for 2021 by Capgemini
  5. 5. 5© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Trend 3: Cloud’s silver lining ‒ business agility Source: Capgemini Financial Services Analysis, 2020 5© Capgemini 2020. All rights reserved | Top Trends in Retail Banking for 2021 by Capgemini Competition To compete in the market with new-age players, banks need a scalable and modular operating environment. Sluggish transformation Banks have pursued digital transformation for over a decade yet struggle with inefficiencies and poor CX. IT cost Banks’ legacy infrastructure racks up significant IT maintenance costs ‒ hitting the bottom line. Cost of ownership goes down as IT maintenance and running costs are slashed by up to 77%. Modern apps accelerate the transformation journey Business continuity and disaster recovery capabilities strengthened Cloud adoption
  6. 6. 6© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Trend 4: Banking-as-a-Service exemplifies Open X potential Source: Capgemini Financial Services Analysis, 2020 Top Trends in Retail Banking for 2021 by Capgemini Banks can streamline and augment their existing channels to reduce cost of customer acquisition. Reinforced distribution Banks can leverage the BaaS networking effect to expand their customer base. Expand customer base BaaS enables banks to generate an alternative source of revenue by monetizing their banking infrastructure Monetize core capabilities Traditional banks could harness growing demand for embedded finance. With an effective BaaS strategy, banks could improve their financial health and KPIs.
  7. 7. 7© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Trend 5: Environmental, Social, and corporate Governance boosts responsible banking and resiliency 7© Capgemini 2020. All rights reserved | Top Trends in Retail Banking for 2021 by Capgemini Green operations: To reduce carbon footprint, banks are emphasizing sustainable operational practices, such as paperless process, renewable energy, etc. Product stewardship: To encourage sustainable banking adoption, banks are offering green financial products, such as recycled cards, clean-vehicle loans at reduced rates, etc. Sustainable risk management: Banks are integrating the ESG factor into their credit risk model and actively gauging the impact of climate risks (and other non-financial risks) on their operations. Stellar performance: Banks that prioritize environmental and climate risks boost their potential to outperform their peers and competitors.
  8. 8. 8© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Key Drivers Low-cost, fast-engaging, and no-friction sales opportunities ‒ such as POS financing ‒ are becoming more convenient and easier to use. Marketing initiatives and checkout signage will drive customer acquisition and create opportunities to boost upselling/cross- selling efforts. A growing trend among aggregators and marketplaces is to simplify the lending process further for both retailers and consumers. Hyper-localized financing could grow as regional retailers and community banks collaborate. To assist consumers financially during the ongoing pandemic, many central banks have reduced interest rates. As a result, a mortgage refinancing uptick is expected. As banks manage their data more effectively, they are poised to cross-sell/upsell peripheral products ‒ such as mortgage refinancing and wealth management products ‒ to existing customers, which will reduce acquisition costs and unlock new revenue sources. Key Benefits Trend 6: Banks tap low-interest, no-friction, value-based offerings to energize customer acquisition Source: Capgemini Financial Services Analysis, 2020 8© Capgemini 2020. All rights reserved | Top Trends in Retail Banking for 2021 by Capgemini
  9. 9. 9© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Trend 7: Banks leverage segment-of-one marketing to hyper-personalize offerings Source: Capgemini Financial Services Analysis, 2020 9© Capgemini 2020. All rights reserved | Top Trends in Retail Banking for 2021 by Capgemini Target customers Beefed up technological and big data capabilities could help banks create hyper-relevant content to target customers with surgical precision. Mass customization Effectively use customer data to hyper-personalize products and offerings for each customer Tailored pricing Banks could customize prices for each customer to improve their revenue per customer. High customer retention Micro-segmentation can help banks attract customers, earn more from existing ones, and increase retention by reducing churn.
  10. 10. 10© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Trend 8: Tomorrow’s frontrunners will offer consumers convenient one-stop shops Source: Capgemini Financial Services Analysis, 2020 Top Trends in Retail Banking for 2021 by Capgemini Better customer engagement. Example: account aggregation services Additional revenue sources for banks. Example: interplay of FS and non-FS offerings Enhanced insights gathering. Example: intelligent source of customer data Rebundling in banking
  11. 11. 11© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Trend 9: Humanizing digital experiences will foster more authentic customer connections Source: Capgemini Financial Services Analysis, 2020 Top Trends in Retail Banking for 2021 by Capgemini  Intuitive interfaces  On-demand  Remote accessibility  Suitable for routine and generalized needs  Emotional connection  Trust  One-on-one conversations  Apt for complex and personalized needs  Hyper-personalized  Deeper relationships  Higher brand trust and loyalty
  12. 12. 12© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Source: Capgemini Financial Services Analysis, 2020 Trend 10: Banks can reduce fraud with end-to-end value chain optimization 12© Capgemini 2020. All rights reserved | Top Trends in Retail Banking for 2021 by Capgemini Banking FraudOpen Banking leading to extensive sharing of data with third parties High usage of mobile and online banking, accelerated by COVID-19 Rogue employee, negligence or lack of awareness
  13. 13. 13© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020 Capgemini is a global leader in consulting, digital transformation, technology and engineering services. The Group is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms. Building on its strong 50-year+ heritage and deep industry-specific expertise, Capgemini enables organizations to realize their business ambitions through an array of services from strategy to operations. Capgemini is driven by the conviction that the business value of technology comes from and through people. Today, it is a multicultural company of 270,000 team members in almost 50 countries. With Altran, the Group reported 2019 combined revenues of €17billion. About Capgemini Learn more about us at www.capgemini.com This message contains information that may be privileged or confidential and is the property of the Capgemini Group. Copyright© 2020 Capgemini. All rights reserved. People matter, results count.

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