This is an excerpt from Finextra’s report, 'The Future of Digital Banking in the UK 2022'.  

Close your eyes for a second.

Imagine you’ve just looped into the future and are now getting ready to order something online. You’re scrolling through websites, looking for the perfect match between price and quality. All of the sudden, you get a notification on your smartphone: it’s your bank app that has just found the most suitable offer for you and it’s even got the link to the corresponding online shop embedded. Looks interesting but you now have to jump in the car and drive to your office. No problem - your bank app voice assistant takes over and asks if you want to continue with the order. “Of course I do”, you answer on your way to work, resting assured that it will all be done for you.

That is not so far away from the present and we can feel some of the future banking possibilities right now. But where is it all heading? What is digital banking transforming into?

Let’s take a look at some of the most important trends in banking that have already started their development and are set to make our lives more comfortable.

1. Smartphones at the centre of digital transformation

Self-service, fast service, comfortable service. What do these service descriptions have in common? They are all provided via smartphones. Most popular banks have already accepted the fact that mobile banking apps have grown from being just a pleasant incentive into a mandatory requirement from the customers.

Of course, some factors have directly contributed to this: the pandemics, open banking, NFC, and others. Clearly, the pandemic has accelerated a process that was only natural to occur at some point, making out of the smartphone the new way of promoting financial services. But this wouldn’t have been possible without the regulators getting involved and opening up access to bank data for fintechs.

Throughout the past two years, 30% of customers have started using mobile banking apps more often, with 78% of them choosing the smartphone as the preferred channel of daily interaction with their bank.

What we are witnessing now in bank apps may be called the ‘super-Mario’ approach: banks are demonstrating, educating, and getting clients used to their apps’ basic functionalities. Once the minimal set of services is absorbed and becomes part of the users’ daily routine, banks roll out a new service within the app, broadening its capacity and easing up the clients’ life.

Time is one of the most important resources appreciated by big companies and individuals altogether. Bank services are expected to be available 24/7 instead of the classical 9 to 6 timeframe. There is growing competition among financial institutions on which one of them will be able to provide the most convenient ‘bank in a smartphone’. This is why there is a ton of effort and money invested into the development of mobile banking apps that are capable of taking all the benefits of open banking and other innovations, and serving them to the end customer on a plate.

2. Artificial intelligence, robotic process automation, and autonomous finance - the trio propelling progress

Full automation of banking services is not that far. With the client-centred approach that banks are adopting and the increasing attention towards means of attracting new customers, while keeping the existing ones happy, concepts like artificial intelligence (AI), machine learning (ML), and robotic process automation (RPA) become indispensable helpers in the banks’ struggle for customers.

It hasn't been that long since AI was mainly used for credit scoring, risk assessment, and customer support bots. Now, combined with ML and RPA, banks take the power of open banking data to a whole new level, developing emotional neural networks that can predict whether a customer will or will not like a certain product or service, with no prior survey.

This trio-powershot of AI, RPA, and ML creates the concept of autonomous finance (or autonomous banking), where the system recognises the client’s behavioural patterns in real-time and the bank becomes able to offer solutions that are truly relevant to the current context.

While AI and ML are already playing an important part in digital banking by helping out banks customise their clients’ approaches and provide precious insights into their spending patterns, the RPA technology is becoming one of the main catalysts in financial institutions’ futuristic development. Banks get the opportunity to intensify the automation of routine processes, such as salaries transfer, loan issuing, and others, with RPA decreasing the time necessary to perform certain tasks by 90% and the expenses for those tasks - by 80%.

Banks need more than automation. They need to provide autonomous banking. And they’re getting closer to it day by day.

3. Hyper-personalisation of banking services - from target groups to target person

What is online banking, after all? It's a means of customising the entire user journey, straight from the first interaction. Unlike the regular concept of personalisation, which uses data analytics for offering products targeted to a certain segment of users falling under similar criteria, hyper-personalisation allows banks to target each customer individually.

Hyper-personalisation lays a solid foundation for people to stop getting lost in the endless stream of ads. Smartly built systems based on the abovementioned AI, ML, and RPA are helping both banks and their end-users. The latter basically get a digital portrait in banks’ system that includes their preferences, their needs, and habits, covering even how often one orders a taxi or has food delivered to their house. Assessing all that information, the bank comes up with an offer fitting just right into one’s life, be it cash settlements with a commission adjusted to their budget, college-dedicated loans, or special conditions for deposits.

4. Speaking chatbots - the new financial advisors

Increasing customers’ inquiries, digitalisation and innovations, paired with banks’ incapacity to effectively address all them have led to the chatbot trend in banking services. Courtesy of the AI, chatbots are serving clients faster, while reducing banks’ expenses. Also, coupled with the above-mentioned tools, like open banking-powered data aggregation and payment initiation, chatbots help banks improve the user-experience with behaviour analysis and financial statements pointing out the expenses that might be cut in order to save more, alongside proposing customised banking services. Moreover, with chatbots, banks manage to decrease the number of errors and enhance the security of their customers’ financial data, since the process is automatised and the human errors have been excluded.

Ok, but chatbots are so yesterday, one would say. Yes, the text-communicating ones are. Luckily, banks are picking up on the ever-changing life dynamics, when people literally multitask all day long and would really enjoy some help in solving their financial problems without getting distracted from daily activities, like paying bills while driving the car. We’re talking about voicecontrolled chatbots, which make bank apps work even faster and simpler.

There are already several banks around the world that have tried out voicecontrolled chatbots, and their reports speak about great successes: Bank of America states that over one million users have already been helped by their app built-in voice-controlled chatbot in less than three months, while Tinkoff reports a decrease by 40 seconds in the average duration of the call-centre consultations, courtesy of their recently introduced voice chatbot.

Also, seems that these banks are making some huge savings, as well, with almost £2 million cost cuts and over 40% more processed customer inquiries. If that doesn’t sound like a futuristic success, then what does?

The digital banking future looks promising, as long as we don’t treat it as a magic wand and expect things to happen and move forward without our input. Competition should grow into coopetition, good old strategies would better be re-written, and focus on the end-user’s utmost convenience must be kept in sight all the way. It is as simple and complex as that.

Click here to download your copy of the Finextra report 'The Future of Digital Banking in the UK 2022'.