NEW YORK–Members of the Forbes Finance Council have put forward 11 predictions for what they see coming in the banking and finance industry in the near future.
The forecasts range from new and diverse services to fewer branches to new technologies to provide greater data security.
Here’s a look at the 11 predictions as published by Forbes:
New And Diverse Services From Banks
“I expect to see a significant diversification of offerings. With interest rates so low and a depressed economy due to Covid-19, many banks are struggling. Smart banks will be looking for new revenue streams from services or products they’re not offering today. This will require bank leaders to think outside their traditional boundary lines. Those who innovate will win customer loyalty and financial rewards.”
–Mia Erickson, Whitnell
Expansion Of Digital Currencies
“Digital currencies are soaking up more and more money from the traditional monetary system. Financial solutions built within the decentralized financial ecosystem—such as digital lending, arbitrage trading, digital financing solutions such as STOs and ICOs, and the tokenization of assets—are directly attacking the traditional revenue streams of banks and taking business away from them.”
–Christoph Lymbersky, Visionary Founders Capital
Fewer Physical Bank Branches
“I expect the industry will be completely moving away from brick-and-mortar buildings. So much banking happens online and over the phone now that there’s a reduced need to have a lot of brick-and-mortar operating spaces, which are expensive to both purchase and maintain. The banking industry is ever-competitive, and reducing these operating costs is an area I believe many operators will consider so they can provide a better value to the customer.”
--Kelly Shores, GCubed, Inc.
Commitment To Sustainable Finance
“Sustainable finance is on the rise, and it’s proven that it’s here to stay. The banking industry will deepen its commitment to environmental, social and governance goals in the years ahead. A recent survey of 200 banking executives found that 75% agreed that their institutions would increase their financial commitments to sustainable finance. Smaller banks would do well to keep pace.”
–Tyler Gallagher, Regal Assets
Focus On Security Solutions For Digitized Assets
“With the industry having had to do two to three years of digital transformation overnight in 2020, organizations are now having to ensure their security transformation keeps pace. Look for organizations that have permanent remote workforces leveraging innovative security solutions to secure the fast-growing digitization of assets.”
–Christopher Konrad, World Wide Technology
Growth Of Nontraditional Lenders
“New players are entering the banking space, due in large part to banks not lending. Most consumers and small businesses don’t understand the difference between what commercial banks offer versus nontraditional lending entities—whether from fintech or investor-backed funds. Consumers want capital at reasonable rates and do not care about the source. Banks will have to adjust or lose customers.”
–Aaron Spool, Eventus Advisory Group, LLC
Tech-Driven Simplification
“The biggest change that’s happening is a move toward simplicity. Fintechs help create a healthy competitive environment, pushing banks to transform. People will always need financial services and financing; however, banks are going to have to chase clients, not vice versa. They will need to simplify their documentation, implement automation, speed up applications and onboarding, offer improved customer journeys and refine marketing to stay alive.”
–Dmitry Dolgorukov, HES Fintech
Rise Of Open Banking/Open Finance
“The banking industry is going to see a lot of changes in the way customers are served. One of the biggest trends is going to be open banking/open finance powered by open APIs, enabling third-party providers to have open data access from both banks and non-banks. This will provide an improved customer experience, new revenue streams and a sustainable service model for underserved markets.”
–Breana Patel, Bonova Advisory, Inc.
Renewed Regulatory Focus
“Black swan events often inspire renewed regulatory focus. The Great Recession attacked credit policy and risk management; Covid-19 is highlighting an inconsistent focus across all risk categories and the need for enterprise risk management. Additionally, as fintechs gain a greater market share, we’ll see a regulatory reckoning of sorts, forcing them to play by the same rules that govern banks.”
–Shawn Sweeney, Spinnaker Consulting Group
Added Risk In Investing In Innovation
“Technology rapidly enables the capture of new financial services market opportunities. However, material, structural changes to the rules and regulations governing banking take far longer. During the next four years, federal regulatory agencies are likely to impose new policies and oversight, which may increase the risk associated with investing in innovation, slowing the pace of real change.”
–Kim Anderson, Longitude Partners, Inc.
A More Inclusive, Secure System
“We’re going to see greater convergence to address both the traditional banked consumer and the unbanked consumer. It will not be an “us versus them” dynamic—rather, it will be a convergence of the best of both worlds, resulting in a more inclusive and secure banking system.”
–Eric Solis, MovoCash, Inc.