Financial institutions are boosting digital transformation, largely to retain existing customers and attract new ones. Customer centricity is reflected in many digital banking trends as banks look to expand their customer base.
Today, the UK is one of the leaders in innovation in the financial services and technology sectors.
As the world shifts to remote work and online payment channels due to the COVID-19 pandemic, digital banking software is more important than ever for financial institutions.
In the UK, traditionally dominated by a small number of large firms, significant regulatory reforms have helped usher in the digital era of banking, allowing fintech companies to expand their markets.
Let’s look at some digital banking trends in 2024. These trends will improve banking services and attract more customers over the next couple of years.
Trends In Digital Transformation In Banking
1. Front-To-Back Modernization
While banks have made significant progress in digitizing their customer-facing systems in recent years, many have failed to harmonize front- and back-office operations. As a result, improvements may not be used to their full potential.
As the quality of banking services then declines, more banks will invest in comprehensive modernization to improve efficiency.
Machine learning models that predict CLV (customer lifetime value) by inputting everything from box office receipts to the likelihood of turnover are useful tools in this case, as after an automated assessment, the system identifies opportunities to reduce costs and improve the customer experience.
2. Intelligent Know-Your-Customer Solutions
KYC (Know Your Customer) solutions are advanced, technology-enabled systems that automate and improve the verification and monitoring of banking customers’ identities and risk profiles to ensure regulatory compliance and fraud prevention.
KYC is indispensable in the banking sector due to increased security and compliance with regulatory requirements. These advanced systems use artificial intelligence and machine learning to automate processes. The technology thus goes beyond basic identity verification to include more sophisticated document verification and biometric analysis mechanisms.
Due to new KYC solutions, digital bank customers can open accounts remotely by uploading documents and undergoing biometric verification through their mobile devices.
As a bonus, smart KYC solutions help banks comply with anti-money laundering (AML) and other regulatory requirements by being better at risk assessment and reporting.
3. AI And Virtual Assistants
Banks are introducing virtual assistants to enhance the online banking experience for their customers. These assistants, powered by artificial intelligence (AI), can carry out simple tasks and tailor banking services to individual needs, often through voice commands.
A virtual banking assistant can assist with paying bills, moving money, checking balances, and looking at investments. It can also block or unblock cards among other functionalities.
AI in online banking is expanding beyond chatbots. It offers personalized advice on financial products by analyzing users’ data and behavior.
For risk management, banks employ AI to sift through vast data sets to identify and address different financial risks.
AI is also vital in detecting fraud by quickly spotting and acting on unusual activities.
There are several ways in which AI achieves this:
- Pattern recognition
- Anomaly detection
- Predictive analytics
AI systems are high-speed. They can process transactions in real-time, allowing fraud to be detected immediately. Another significant impact of AI is the optimization of back-office operations, including loan processing and compliance.
4. Cashless Payments
Cashless transactions mean speed and efficiency, which is a valuable benefit for customers. The use of digital wallets and one-touch contactless cards is growing in the UK. In addition, QR code technology is used in mobile wallets, digital payments, and supermarket applications.
Thus, the trend towards cashless payments is developing dynamically. It is expected that global cashless payment volumes are projected to increase by more than 80% by 2025.
Therefore, when developing a banking application, you need to make sure that it supports the main methods of non-cash payments:
- NFC
- Electronic wallets
- QR codes
- Virtual cards
Investments in POS terminal technology are also becoming attractive, as physical, virtual, and mobile POS terminals are in high demand among small and medium-sized businesses looking to support cashless payments.
5. Omnichannel Services
The omnichannel trend is integral to many industries, and digital banking is no exception. With the shift to online banking, customers are using more and more channels to interact with financial institutions.
Therefore, digital banks that want to meet the needs of their clients must provide a consistent omnichannel experience, whether using a single interface or moving from a mobile app to a chatbot, the UX must be equally seamless.
Providing a great user experience across all channels requires investing in UX design. This helps identify areas for improvement. High-quality integration of all channels is also essential, as it ensures the collection of all necessary data about the client on a single management platform.
6. One End-To-End Service Platform
Today’s users are too busy to have multiple financial apps on their smartphones. Therefore, they prefer providers that offer their products on a single platform.
This way, if a company strives to develop a banking application that will effectively attract users, it needs to combine all its functions.
The trend towards creating all-in-one platforms has been around for the last few years, and in 2024 they will become a must-have attribute for online banking.
In Conclusion
In 2024, digital transformation will be a must. Therefore, we can safely expect that more and more banks will switch to digital technologies, and many financial service providers will undergo digital transformation.
Key digital transformation trends in the banking sector such as artificial intelligence, omnichannel banking, personalization, and customer-centric service will continue to trend.
At the same time, smart KYC and cloud computing are likely to grow significantly in the next year, being one of the priority areas for investment and development.
Find out more about fintech angel investors in the UK.
