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Future of Banking in 2022 -Moving Full Throttle Ahead with a Purpose

With digital alternatives taking over, age-old banking models are no longer in the driving seat.

  • Financial institutions are consolidating their old business models and new financial architecture to excel as digital-only players in the competitive market.
  • Regulatory authorities and bankers are prepping to seize opportunities with a keen eye on business focus, higher standards and a clear purpose-centric approach.
  • The attention is on digital-only players targeting higher revenue growth with flexible roadmaps, rather than bankers having traditional models.
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    Conventional Models Going for a Toss: Digital Toolboxes for Compliance and Risks

    Monolithic and vertically integrated banking value chains are giving way to microservices and products. Globally, banking giants are repackaging their products with shared components to provide end-to-end customer experiences.

    In this scenario, digital-only players are adapting non-linear, purpose-centric strategies to scale their operations. They are looking for more innovative and future-ready products that can be acquired and shared with customers at low costs.

    Trend #1: Less Fees

    Cancellation of overdraft fees

    According to Consumer Financial Protection Bureau (CFPB) data, Bank of America, J.P. Morgan Chase and Wells Fargo were responsible for 44 percent of fees (estimated $15.47 billion) collected in lieu of overdrafts in the year 2019. 80 percent of the amount collected as overdraft fees were received from less than 9% of their customers.

    Despite these encouraging figures, most banks in the USA are modifying or completely removing overdraft fees to level up with fintechs charging zero overdraft fees. This move is targeted towards making customers happy and retaining their loyalty in future.

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    Trend #2: Embedded Banking

    The rising popularity of embedded banking

    Embedded banking – wherein banking transactions are carried away from a bank’s portal, branch or app – gained momentum in 2021 and is here to stay. The loan services on purchases provided by e-commerce portals, such as Shopify, is a striking example of embedded banking. Carrying the trend forward, financial services and banks are offering their products to customers at the easiest and most useful point of engagement to solve their problems. Financial service products and embedded finance solutions can be used to identify and address next-gen customers needs proactively to keep them happy — and as customers.
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    Trend #3: Cryptocurrency

    More banks to provide cryptocurrency services

    The value of cryptocurrencies increased 300 times over in 2021 to reach a global figure of $2.25 trillion Given this, there seems to be no turning back for crypto investors. The market watchers at Xtrictech 3PL expect the prices of digital currencies to continue rising this year. A steady increase in their market capitalization has encouraged banks to add on partners like Anchorage, Figure, NYDIG and Tassat to handle crypto custody.

    The buying and selling of cryptocurrencies are channeled through scalable mobile banking apps that rely on the latest digital technology, such as Blockchain. Blockchain is helping the global banking sector grab new opportunities, manage regulations, and test proof of concepts. 2022 should witness further formalization of cryptocurrency regulations to meet the business purpose of customers and their banking channels worldwide.

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    Final Thoughts

    Trends for Fintechs and Big Players in the Banking World

    Challenges are rising ever since the virus struck, making it imperative for telecommunications and connectivity companies to emerge as essential service providers. New and emerging trends are pointing towards more streamlined telco-backed online services. Remote work has already become a reality for McKinsey, PepsiCo, Salesforce and other agile delivery organizations committed to acceleration and sustainable modernization. It’s now evident that the current tsunami of technology-aided connectivity solutions will continue in 2022 and beyond.

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