Digital transformation in the financial industry is a hot topic right now. Even pre-pandemic, many financial businesses had been looking for ways to provide their customers with a better digital journey and automate internal processes through digital transformation solutions.
On top of that, the COVID-19 pandemic has accelerated digital transformation in many industries, including the financial industry, because companies need to conduct as much of their business digitally as possible.
This is needed to decrease face-to-face interactions for personal safety and to continue to meet business goals while complying with all the lockdowns and other restrictions that have been put in place on and off over the past year.
Not all transformations are due to the pandemic, though. There are also new demands in society for things like sustainable banking options that are contributing to changes in the financial industry.
So, with 2022 upon us, we wanted to take a look back at some of the changes and trends in the financial industry from 2021 that are sure to stick around in 2022 and beyond.
Digital Transformation Trends in the Financial Industry To Keep an Eye on in 2022
Fewer brick-and-mortar bank branches
One of the biggest direct results of the current digital transformation in financial services is a reduction in the number of physical bank branches (and other financial service company offices).
As financial institutions move more and more of their business online, and customers are quicker to adapt to using online banking services, there is simply less need for brick-and-mortar branches to take care of personal and business finance needs.
Physical branches are expensive to staff and operate. So, if banks and other financial service businesses can operate primarily online and over the phone, they can increase net revenue.
Not only that, but by offering clients the ability to take care of their finances without going to a physical branch, financial firms are able to make even more sales and improve customer retention.
Rise in self-service financial services
Going along with a decrease in in-person financial services is a rise in self-service financial services.
Things like chatbots and machine learning are decreasing the need for employees available to answer common questions over the phone, via email, and in-person.
Instead, customers can simply call and interact with an automated voice or chat to a bot online to ask questions about their financial products, make transactions, or modify their accounts.
In fact, when it comes to financial products like insurance, bots and machine learning algorithms can even take care of the whole insurance sales and customization processes that would normally be managed by insurance brokers and/or sales people.
This not only improves the digital customer journey for financial institutions, but it also streamlines workflows and lowers the bottom line for operating costs. It also means that companies can offer 24/7 customer service instead of just offering financial services from 9 to 5.
Higher demand for sustainable banking
With more availability of different financial services online, customers are no longer limited to choosing a bank or an insurance company in their local area.
This means that consumers are more free to choose who they bank with or purchase financial products from based on things like shared values, such as environmental friendliness.
An increasing number of financial institutions are meeting the higher demand for sustainable banking by refusing to invest in environmentally-harmful initiatives, like fossil fuel extraction.
Instead, sustainable banks are investing their customers’ deposited funds in climate-positive things like renewable energy projects.
While many large, traditional banks will certainly continue to invest in big oil, there is an increasing number of smaller financial institutions, including credit unions and online banks, leading the way in offering environmentally-conscious financial services.
Increase in low-code and no-code development
Low-code and no-code development platforms allow businesses to stretch their existing IT resources, lower IT costs, and get web-based applications and systems to market for their clients fast.
As the names imply, such platforms allow someone with little to no knowledge of traditional coding to build an app or program, using things like drag-and-drop design capabilities.
This means that companies don’t need to employ or contract developers to build the tools that they need and get them up and running quickly.
For companies that do already employ developers, they can make apps in half the time as normal by building the basic foundations with low code or no code, then improving upon them by adding more code for added features and functionality.
Financial institutions are taking advantage of this technology to digitize outdated processes and improve their customers’ digital experience, as well as to optimize internal functions and increase the productivity of their workers and business as a whole.
The Bottom Line
The financial industry is embracing digital transformation at faster speeds than ever, and will continue to do so in 2022 and the years to come.
This is highly beneficial for both financial businesses, such as banks and insurance companies, and their customers.
Keep your eye out for some of the digital transformation trends in the financial industry and consider how they can benefit you!