Challenges in the Banking Sector

Almost every business and industry are affected recently whether it is small or large. One such sector that has been significantly affected is the financial sector. Banks faced problems such as a remote working workforce, a slow rate of the mortgage, increased customer call center pressure, decreased net interest income and behavioral changes of the customers and society. In addition to these short-term effects, banks have to be ready for the medium- and long-term issues to work efficiently in this “new normal”.

What is the Future of banking?

As the lockdowns owing to COVID-19 have started to lift all over the world, banks are coming back on track with customers returning to branch, ensuring safety and hygiene measures by the usage of masks, sanitizers and social distancing and it is likely to continue for a longer period. With growing digitalization all over the world, banks too should adopt more of the digital transformation as it is going to be an essential step in the growth of the banking and financial sector.

Empowering customers to use more of the digital banking facilities as well as using data to provide personalized services can bring long term stability in the market. Banks should help in areas such as corporate financial risk management and supply chain solutions during the time of this pandemic. As we move out of this COVID-19, banks should have a clearer picture of their suppliers as well as their partners and seek to benefit from them. Efficient saving measures, reallocation of the management, better management of the workforce and cost-efficient methods to be adopted for the preparation of the future period.

Adaption of mobile banking services with advanced technologies such as voice activation and the use of augmented reality can be done to boost the future growth of the financial sector. By acting as a digital client, banks are being rewarded with improved profits, higher deposits, and additional service fees along with consumers’ loyalty.

According to a speech said by Tobias Adrian, Financial Counselor and Director of the Monetary and Capital Markets Department in the Global Financial Stability Report, equity markets have recovered their pandemic losses and yields in sovereign and corporate debt have fallen significantly in advanced economies and many emerging markets. As a result, global financial conditions have eased significantly and thus our financial markets are getting stable and better with time with safe, fast and secure engagements.

Digitalization is the future

Applications of digital technologies in financial services

The table represents the application of digital technologies to financial various categories of financial services. Some digital technologies can be widely implemented while others remain more limited, but all have the potential to considerably impact the banking sector.

Source: OECD (2018), Financial Markets, Insurance and Private Pensions: Digitalization and Finance

Fatpos Global predicts that the financial market is anticipated to register a significant CAGR in the coming decade. Measures such as the adaptation of digitalization, diplomatic decisions, strategic development and adapting to operational change should be followed by the banks to prepare themselves for the new normal. Technology is opening up new opportunities and ways of keeping both people and financial services safe. The future of the banking industry is expected to be dependent on its power to understand the customer's approach, its advanced analytical skills and the adaption of digital technology to provide services that help the customer in better managing their finances.