In the last few years, banking as an industry has seen a massive move towards digitization. Traditional banks are challenged by new-age, digital only banks that rely on replacing the traditional banking experience with a hyper-personalised digital first approach. In addition, banks need to boost their Return on Equity, bring down Cost to Income ratio etc. in order to stay competitive. Banks have also been facing threats from new entrants such as Google, Amazon and other technology companies looking to enter this space. COVID-19 has accelerated some of these trends, like changed customer behaviour and adaptation of newer tools and technologies by the banks.
Surveys observed rapid increase in customer reluctance to visit branches and they are inclined to try out newer tools to meet their banking needs. Banks have been closing branches globally at an unprecedented scale. Citigroup closed about 100 branches and JP Morgan, the largest bank in the US closed about 1000 branches in the immediate aftermath of the pandemic.
Customers now expect banks to maximize digital interactions and come up with digital alternatives for their day-to-day banking needs as they are now more open to trying out a new app than they were before the COVID-19 pandemic.
Digital Banking – Way Ahead
In the post COVID world, digital banks will need to replace many of the customer’s existing transactions and interactions with the bank by improved use of technology.