For all the business continuity planning banks had in place at the start of 2020, none planned for the as-yet untallied cultural and economic repercussions of that year. We identified some key banking trends for the coming years, but world events have turbocharged those changes, in particular, the development of digital-first, experience-driven banking focused on shared values, connected ecosystems, and a wider purpose.
Events since early 2020 have split the industry in three. Some banks were left asking, "What happened?" Others continue to respond only to what's happening in the moment. The third group has harnessed predictive insights to accurately anticipate what's going to happen.
If they haven't already closed their doors, the banks left asking, "What happened?" will not survive. These are the institutions born out of the industrial revolution, where customers receive product advertisements through the mail, wait in line at bank branches, and endure lengthy application processes to get the money they need.
Early in the pandemic, most banks were in the "What's happening?" group. They were immediately reactive, as the situation dictated – moving employees home, finding ways to make customer data secure, and hiring more call-center staff. These banks will survive, but they will not be significantly better off in the long term.
Some banks have managed to generate enough insights to say, "This is what's going to happen." Some of these are fintechs, born in the cloud and thus already prepared to deliver everything digitally. But others are more traditional banks that, for example, had been conversing with cloud service providers and jumped to sign long-term deals.
These banks saw the opportunity to shift from a digital channel mindset to a digital core, and they are using history in the making as their burning platform for change. "By the time this is all over," they seem to say, "we will be digital."
In Genpact's Banking in the Age of Instinct report, we predicted that banks would need to make significant shifts to thrive in the future. The three macrotrends we predicted are here, and leading banks are responding to them today: