Post-Pandemic Banking Evolution

What does it take for banks to thrive in this transformed landscape? This article delves into the pivotal shifts in digital banking, revealing how Banks worldwide have transitioned from feature-driven competition to a new focus on customer-centric experiences, efficiency, and trust. Discover the strategies and innovations shaping financial services’ future and redefining customer expectations.

From Feature Overload to Quality Experiences

During the pandemic, financial institutions rushed to add digital functionalities, meeting the surging demand for online and mobile banking. However, this innovation race often resulted in complex interfaces and redundant features. Now, the shift is clear: banks prioritize experiences’ quality over quantity.

Deloitte 2024 Digital Banking Maturity (DBM) report assessed 349 banks across 44 countries and highlighted 40 banks – called Digital Champions – that lead the transformation. Europe is leading the pack with the most institutions (17) in the top 40, closely followed by Asia (15) and tailed by South America (6) and North America (2).

According to the study, Digital Champions implement on average 1.6 times more features helping in day-to-day banking, with a focus on account and product, card and personal finance management. They also implement on average 2.3 times more features that expand customer relationships, with a focus on bancassurance, beyond banking, ecosystem and account aggregation and investment services. This focus on core functionality ensures seamless, user-friendly experiences and strengthens customer loyalty.

Hyper-Personalization Through Data

Banks are embracing real-time data analytics and AI to personalize services at an unprecedented scale. This transformation enables financial institutions to anticipate customer needs and provide tailored recommendations – whether it’s budgeting tips, investment advice, or context-specific offers.

For example, 81% of Digital Champions use personalized push notifications to deliver financial insights, while only 34% of other banks do the same. Additionally, the best banks are 2.5 times more likely to use banners and pop-ups for personalized messaging, which helps with addressing specific user preferences and needs.

Hyper-Personalization supports optimization of processes and services for specific audiences, generally enhancing customer experience. This leads to greater satisfaction and increases client’s loyalty and long-term engagement.

AI-Powered Operational Excellence

Artificial intelligence extends beyond customer-facing features, streamlining internal operations. Tasks like compliance checks, document verification, and loan approvals are now automated, reducing processing times and minimizing errors. For example, in many cases, AI-driven loan approval systems in top banks now reduce waiting times to under 30 minutes.

Predictive maintenance powered by AI has significantly improved system uptime, allowing the top 40 institutions to achieve 100% availability of their online services, a benchmark that only 60% of other banks meet.

The DBM report also highlights the impact of AI on improving compliance processes, such as anti-money laundering (AML) and know-your-customer (KYC) checks, which are becoming industry standards.

Trust and Security: The Cornerstones

In a digital-first environment, trust is paramount. Enhanced cybersecurity measures, including behavioural biometrics and strong customer authentication, have become standard, bolstering confidence in digital platforms. Compared to just 46% of other banks, over 90% of Digital Champions provide advanced authentication including ID scanning, video conference with bank agent and importing the data from accounts in other banks.

Regulatory compliance also plays a crucial role, with pack leaders being 1.6 times more likely to integrate strong cybersecurity measures that align with PSD2, MiFID II, DORA and other frameworks.

The Rise of Ecosystems and Super Apps

Inspired by Asia’s “super app” model, banks are broadening their scope, integrating services like investment management, travel bookings, and even grocery deliveries. The most advanced banks are 2.6 times more likely than their peers to offer value added services (VAS).

The most popular auxiliary functionalities offered by banks are: loyalty programs; special discounts and promotions; mobile phone top-ups; credit scoring; payments for parking, public transportation and motorway access; applying for social benefits; submitting income tax forms. Built-in services limit the number of applications used on a daily basis by customers and help them to focus on other activities than testing dozens of new apps, remembering different passwords, and struggling with various interfaces. At the same time, it makes the banking app much more engaging and attractive, enhancing its usage among clients.

Accessibility: Bridging Gaps for Inclusive Banking

Banking evolution has also seen a growing emphasis on inclusivity, with accessibility becoming a critical area of focus. The top 40 are slightly leading this effort by implementing features that make digital banking more inclusive for users with disabilities. According to the DBM 2024 report, 29% of these banks offer visual impairment facilitators, compared to 20% among other banks.

However, there is still much work to be done. Globally, only 22% of leading institutions offer sign language availability, 18% offer font size adjustment, 15% colour contrast adjustment, while text-to-speech functionalities are available in only 4% of them. Significant improvements in this area would not only ensure compliance with regulations but also cater to a broader customer base, fostering trust and loyalty in an increasingly diverse user demographic.

Conclusion

The banking landscape continues to evolve, driven by a commitment to efficiency, customer-centric innovation, and technological advancement. The 40 banks, standing out among 349 assessed banks, lead the way in transforming digital banking experiences with higher implementation of advanced features.

Banks that embrace simplicity, hyper-personalization, trust-building initiatives and accessibility will set the benchmarks for the future of financial services. For customers, this means intuitive, secure, inclusive and value-driven banking experiences that resonate with modern expectations.

We will be closely observing the upcoming changes and innovations while doing the best we can to be a part of the user-centred evolution.