As we look forward to 2022, digital transformation will continue to drive re-invention and innovation across all sectors of the financial services industry. And, as the lines blur between industries, they will also blur between traditional financial services segments.

  1. More integrated experiences for all customers. Financial institutions of all sizes and across all industry sectors will compete on the basis of hyper-personalized experiences, which can only be delivered by integrating that experience across the entire customer journey.
  2. Commercial banking customers expect the same experience as in their retail environment and experiences. With innovation finding its way deep into customer experiences, their expectations are rising. There will be a blending of the commercial and retail customer experiences.
  3. Large banks will focus on offering value added services to their commercial customers and creating new revenue streams through better integration with ERP systems, embedding finance, payments and information services.
  4. Embedding payment services is key to delivering a differentiated experience. To do so, financial institutions, retailers, healthcare, and every other industry that relies on a payment transaction will utilize APIs and SDKs to make it happen.
  5. There will be major consolidation in the neo retail banking world. There are far too many neo banks offering one or two services, which is unsustainable. They will look to merge or consolidate to accelerate growth trajectories.
  6. The big banks still have the customers and will focus on upgrading their experiences by partnering with fintechs. Fintechs attack inefficient areas of the ecosystem to deliver better services and customer experiences. The use of data to improve customer experience will be the key drivers for core banking integration to deliver higher value services – be it in spend, borrowing, investing or saving.
  7. Banks will continue to offer more integrated services to other “front-end banks” and generate new revenue streams from their back-office capabilities. Banks are also investigating the use of new core banking platforms to support digital transformation efforts including application modernization , cloud , APIfication of existing services.
  8. Banks will focus on building the next generation experience, specifically to be relevant for their customers in real-time and support anywhere, anytime banking.
  9. An unexpected lesson from cryto exchanges – customer will be demanding financial services 24×7. “Banker’s hours” will become a thing of the past.
  10. Most large banks will slowly adopt support for crypto currencies and support Central Bank Digital Currency (CBDC) initiatives as regulators are showing support for the same.

This trend is not new, but it’s coming to a head in 2022. Customers have been decentralizing their financial services for years, picking the best provider for individual services. This flexibility is great for the customer, but also adds unnecessary complexity.

2022 will be the year of simplification – simplifying the customer experience and the ecosystem through partnerships and consolidation. However, this requires the ability to leverage technology to simply the complex. Therefore, financial institutions of all types will be required to partner more aggressively than ever before with technologists outside of their organization that can bring deep digital engineering expertise together with core industry experience to simply the complex and provide value to their customers.

Content originally featured by The DataQuest on December 20, 2021.