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2021 Fintech Predictions

A return to relationship banking

The move away from customer-centric banking was so gradual that we barely noticed it. There was a time when having a personal relationship with your local branch  manager who you met with regularly, understood your finances and gave you advice was commonplace. Digital technology changed this, focusing on convenience, increasing competition and making the mobile customer experience the key differentiator. While these advancements have benefited customers in many ways, in some instances it has placed the emphasis away from the customer-centric model which once defined banking.

The emergence of COVID-19 made this increasingly apparent and highlighted that there is still a need for relationship banking, particularly for vulnerable and non-digital customers. The crisis impacted many people’s financial stability and gave rise to many questions on the support available to customers. Furthermore, customers availing from banking services during this time that typically required face-to-face interaction, such as mortgages, were now moving through this process digitally.    

At the same time, we reached critical mass of new entrants. Banks are now faced with having to adjust and ward off competition, while also maintaining the relationship with customers who favour traditional banks and processes, as well as those who prefer digital banking.

COVID-19 has emphasised the different needs of customers depending on their situation and demonstrated the importance of focusing on bespoke and personalised services dependent upon customers’ individual needs and wants. We will see a return to relationship banking in 2021 as a priority, but now combined with the convenience and benefits offered by digital banking. It’s a delicate balance, but employing the right technology will be critical for banks to deal with customers in the right way, according to their expectations.  

A significant increase of cloud adoption in banking

While cloud banking has been on the precipice over recent years, the perceived technology risk has prevented this from being implemented in any significant way. However, now the business risk to not implement cloud technology has overtaken this technology risk. This is primarily as a result of two elements:  

  1. With competition reaching critical mass in the banking industry in recent years, agility is essential in being able to compete and drive new products quickly to market. A bank can no longer decide to forgo modernisation and cloud adoption, unless they are open to the risk of becoming overtaken and obsolete.

  2. COVID-19 has plunged banks into an unknown future. Banks have had to adjust processes and policies overnight in response to changing regulation and customer requirements, which legacy, on-premise systems were not built for. As the crisis continues to evolve, banks are navigating blind on how to proceed. This has emphasised the need to have a system that allows banks to pivot quickly and smoothly. 

Cloud technology is essential to banks competing and surviving in this new era. While this shift was always inevitable, developments in 2021 have made this a non-negotiable and as a result, we will see widespread adoption of cloud banking in 2021. 

Tactical movement on embedded finance 

While we won’t see big technology and non-banking players entering the banking industry in any significant way in 2021, we can expect these players to take careful, tactical movements toward establishing a notable, long-lasting presence. 

Big technology and banks think differently and move at different paces, which presents challenges to both sides. Regulation is also a remaining issue for big technology companies. There are necessary steps to take in order to navigate these obstacles which non-banking players will continue to face through 2021. 

The role of AI

Larger banks and financial institutions that haven’t implemented a flexible core banking platform can sometimes have trouble with digital interactions between their clients. Oftentimes they will struggle to be nimble enough to build something “on the fly” that would be individualised enough for clients. For those larger institutions, AI will play a major role in the way they shape customer journeys and the way customers interface with banks. 

While we don’t recommend AI be directly part of your core banking platform, it is very important for your core to be flexible enough to integrate with a partner that provides AI capabilities. This is especially true when it comes to building and adjusting customer journeys, and implementing AI for things like KYC, anti-money laundering tools and transactions monitoring. As we look to 2021, it will be extremely important for banks to embrace new technology – like AI – in order to keep pace.




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Elliott Limb

Elliott Limb

Chief Customer Officer


Member since

21 Dec 2020



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