Banking 2020: These are the transformation trends

Banking may still sound new German, but the resounding success of neobanks like Revolut and N26 has already shown in 2019 how customer needs are shaping the financial industry of the future. The use of new technologies is a second major threat to banking and insurance, alongside general upheaval.

The Swiss financial centre is anything but at a standstill, but can the rather sluggish banks and insurers keep up with the pace of the ongoing transformations? What measures are necessary? The technology and marketing service provider Axciom has defined the coming trends.

Cooperations and again cooperations

As an individual bank or insurance company, regardless of its size and importance, it is impossible to adapt to the ongoing changes in the financial industry on its own or even to help shape them. Strategic cooperations will become much more important. The goals of such cooperations can be technology gains, product or market extensions as well as gaining customer interfaces.

The collaborations will go beyond fintechs and startups. They will include established technology providers, possibly also municipal or even state institutions, Axciom says. Such bilateral or multilateral networks should always aim to offer even more customized customer solutions. The means of deployment are data and its analysis as well as modern communication platforms.

data and data again

The data is there and so are the technologies to analyze, evaluate and target it. In 2020, the use of customer data will be a much more central element in providing solutions and services.

But the term customer data needs to be much broader: Internal transactional data, demographic and psychographic data. Consumption, communication and social media data, geo-location data - combining and evaluating these will be key to not only serving existing customers much better, but also attracting new customers.

Forced attack by the newcomers

Traditional banks and insurers have the advantage over fintechs and innovative startups of having more capital, an existing customer base and a proven infrastructure. The disadvantages compared to the challengers are speed, innovation and customer focus.

The trend towards open banking and open interfaces will accelerate the transformation, as fintechs can adapt their business models very quickly to new market needs, as Axciom notes. The trust advantage enjoyed by established banks and insurers is diminishing with every year that fintechs increase their market share.

Marketing is redefined

The evaluation of data in combination with new marketing technologies opens up huge opportunities to define and address targeted customer groups. Since it is extremely difficult to acquire new customers anyway, marketing will also focus on existing clientele. The magic word is multichannel marketing, i.e. the combination of different digital and analogue channels.

Measurement and analysis of marketing success enable highly efficient use of resources. Not only the result is important, but also the understanding of how customers react to the individual marketing measures and which behavioral patterns they display. This is the only way to create a smooth customer journey.

The solution to the platform problem

While platform banking is on everyone's lips, hardly any financial institution has managed to transform its business model accordingly. After all, a true platform offers products and services from multiple organizations to serve the needs of a broad customer base.

The problem for financial institutions in implementing this is, firstly, technological deficiencies and too little experience in cloud computing. Secondly, there are reservations and risks regarding the use of customer data by third-party providers that would form part of the platform. The banks have to overcome these hurdles in order not to lose their customers.