While the challenges of digital transformation dominated 2020 and 2021, 2022 appears to be a stabilising year in terms of new normal business operations.
Working remotely, switching systems to digital platforms, and creating user experiences that kept clients during the epidemic are all big challenges that have since been overcome. There have been numerous changes. There are still a lot of things that need to be streamlined. However, a balance has been found, allowing for the development and growth of innovation for its purpose rather than crisis-driven necessity. The top three trends that will shape banking and financial services in 2022 are examined.
Industries that will be driving Digital Financial inclusion in 2022:
- Fast-moving consumer goods (FMCG): Digital payments allow FMCG firms to collect data on their small retailers and customers throughout the supply chain. Small shops can make payments to FMCG distributors more easily, minimising the risk and bother of dealing with cash. Meanwhile, FMCG firms can have near real-time inventory information and greater demand visibility, assuring enough supply and increased sales for their clients.
- Funeral Industry: While cashless transactions are popular, today’s technologically aware customers desire new payment options, such as Apple Pay, WeChat, Interac e-Transfers, and Alipay. Offering them different payment choices can help the industry upsell and provide relief during, say a Christian funeral, something that will be remembered.
- Healthcare: The increasing rise of chronic illnesses is one of the most significant problems affecting the population today. Many firms will be utilising behavioural economics and gamification to encourage patients and establish healthy behaviours to combat the increase of chronic illnesses and their related recurring costs.
The Rise of Digital Banking
The use of bricks and mortar has become increasingly popular in recent years. Over the last two years, branch closures have reached an all-time high, owing not only to the pandemic but also to widespread mobile penetration and novel banking services that are now available at your fingertips.
According to Global Market Insight in 2019, the fintech evolution of digital banking has reduced physical visits to brick and mortar bank offices by 36%, and this trend is projected to continue as the movement gains traction.
The reality that the good old days of monopoly are now crumbling has been recognised by incumbents in general. Many of them are developing digital replicas of themselves to keep up with competition and preserve a leaderboard place.
While this is a positive step in and of itself, many experts believe it is not a long-term answer. Success is possible if digital subsidiaries only offer incumbents a temporary solution while they transition their core old systems to a more flexible architecture. After all, they have the consumer base and market presence to maintain their dominance for many years.
However, even if a digital twin is present if outmoded legacy systems remain key to the bank’s functionality, the bank risks falling behind because they lack the flexibility and agility required to compete in the post-2020 environment.
The Customer Experience and Data
Now that digital banking has established itself as the preferred method of payment, we will see a slew of new technologies emerge, not only to better engage clients but also to supply them with far more customised products and services. This transition is centred on data. Better AI and machine learning insights lead to more precise analytics and, as a result, a better understanding of how customers function and what they desire.
Real-time analytics also improves service speed. Customers expect immediate responses to their banking status and services such as loan applications in 2022. Better security can be developed as a result of this, with bio authentication ranging from voice recognition systems to improved cyber security capabilities.
As part of the customer experience push, gamification and incentives are expected to flourish in 2022.
Artificial Intelligence and Adaptive Machine Learning
Companies will expand their usage of intelligent technologies, from typical institutions testing automated advisers to advanced algorithms examining credit profiles. Artificial intelligence, machine learning, and robotic process automation are bringing a slew of benefits to the banking industry, including lower loan default risk, better risk management, operational efficiencies via data gathering and analysis, and improved client experiences.
Going Cashless and Utilising Payment Technologies
Cash is rapidly disappearing; according to predictions, the United Kingdom will be almost fully cashless by 2026, while Sweden and other Nordic countries aim for total digital transactions by 2023.
Customers will use contactless payment methods that run on mobile phones, and stores will become increasingly automated. There will also be efforts to cut down on the amount of credit and debit cards produced.
Due to the environmental impact of cash and card production, only enterprises that transitions away from traditional currency and plastic payment cards are favoured.
Credit cards are also becoming less popular among Millennial and Gen Z clients. Credit card usage has decreased considerably over the last two years as a result of the vast majority of online retailers now offering zero-interest instalment payment options.
