The future of retail, mobile, online, and digital-only banking technology in 2022 (2024)

• An increasing demand for a digital banking experience from millennials and Gen Zers is transforming how the entire banking industry operates.
• Consumers’ growing desire to access financial services from digital channels has led to a surge in new banking technologies that are reconceptualizing the banking industry.
• Do you work in the Financial Services industry? Get business insights on the latest tech innovations, market trends, and your competitors with data-driven research.

Digitalization is changing how people interact and do business on a day-to-day basis, and advancements in banking technology are continuing to influence the future of financial services around the world. An increasing demand for adigital bankingexperience from millennials and Gen Zers istransforming how the entire banking industry operates.

From retail andmobile banking, toneobank startups, technology has its hand in seemingly every aspect of the banking industry; and, the influence of technology will continue to launch banking into a digitized future.

Retail banking,also known as consumer banking, refers to the specific services banks can offer to consumers–such as savings andchecking accounts, credit and debit cards, and loans. Consumers’ growing desire to access financial services from digital channels has led to a surge in new banking technologies that are reconceptualizing the entireretail bankingmarket.

Technology geared toward improving retail banks’ operational efficiency is positively impacting the market. According to Insider Intelligence, 39% of retail banking executives say that reducing costs is where technology has the greatest impact, compared to only 24% who say it’s improving customer experience.

Retail banks are also launching platforms in theBanking-as-a-Service (BaaS) spaceto remain competitive. For example, UKneobankStarling used to exclusively offer business-to-consumer (B2C) retail banking services; but, after launching aBaaS platform, Starling diversified its product and revenue streams, helping it remain relevant in the neobank space.

Meanwhile, mobile banking has solidified its place as a must-have feature for financial institutions to remain competitive, particularly among digitally-savvy millennials and Gen Zers. In fact, over 45% of respondents to Insider Intelligence’s fourth annualMobile Banking Competitive Edge Studyidentify mobile as a top-three factor that determines their choice of FI.

Future of mobile banking

Mobile banking has become the go-to method for users to make deposits, account transfers, and monitor their spendings and earnings—and a key differentiator for banking leaders. Nearly 80% of our survey respondents who have used mobile banking say it is the primary way they access their bank account.

Since the onset of the coronavirus pandemic, mobile capabilities is a more significant factor in bank selection among respondents than it was last year. Financial institutions should understandwhich mobile banking features consumers value mostand where they stand compared to their competitors, so they can pinpoint specific areas to devote the most attention to.

The foremost concern consumers have when mobile banking remains security. The fear of data breach increases the demand for services that keep users’ data secure–allowing consumers to place holds on credit or debit cards, schedule travel alerts, and file and review card transaction disputes are some successful security banking features.

Online banking, which includes mobile banking, refers to the overall experience of banking through digital channels, including mobile apps, desktop, live chatbots, and more.

The popularity of mobile banking has surpassed that of online banking, and the overall number of online customers has slowed worldwide. According to Insider Intelligence, mobile banking is growing at five times the rate of online banking, and half of all online customers are also mobile banking users.

Despite this growing popularity, some banks still fall short on the demand for mobile tasks, like bill pay and reward redemption, causing them to push users to online banking. However, even this push won’t be enough to popularize online banking as millenials and Gen Zers continue gravitating toward the mobile market.

Digital-only banks, also known as neobanks, are redefining the future of banking around the world. Though off to a slow start in the US due to high regulatory barriers, recent developments and the loosening of regulations suggest that US neobanks are set to take off.

Future of digital-only banks

Sophisticated mobile banking tools are a top factor fueling US neobanks’ stratospheric rise—one that’s taken on more importance amid COVID-19. Incumbent financial institutions, neobanks, and tech companies alike can benefit from understanding exactly how leading neobanks are raising the bar for customer expectations and trust to successfully scale their businesses.

San Francisco-based Chime, the largest US neobank, has attracted over 7.4 million account holders by 2019, and is projected to grow this figure to 19.8 million in 2024. The development of more neobanks in the US will bring awareness to digital-only banking, and eventually wane-out traditional banking firms.

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The future of banking technology is driven by consumers, especially Gen Zers, who see technology as something that enhances their lives. A common trend in banking technology is using an application programming interface (API) to make proprietary data available to anyone who has the consumer’s permission to access it.

APIs could be used to enable a bank’s mobile app to pull down customer account information. Fintechs have also used API technology to enable their businesses to work, and their success is encouraging competitors to develop their own APIs.

Additionally, a 2020 Insider Intelligence survey of banking executives found that 66% believe new technologies like blockchain, artificial intelligence (AI), and the Internet of Things (IoT) will have the greatest impact on banking by 2025. According to Insider Intelligence,banks are exploring blockchain technologyin hopes of streamlining processes and cutting costs.

Consumers can already see AI being used by most banks through chatbots in the front office.Banks are using AI to smooth customer identification and authentication, while also mimicking live employees through chatbots and voice assistants.