3 Factors Disrupting Retail Banking

Banking CIO Outlook | Tuesday, October 01, 2019

Personalized financial recommendations, automation, and a holistic financial view make the primary factors to impact the retail banking sector significantly. 

FREMONT, CA: With increasing innovations and developments, retail banking might be on the verge of massive transformation. Emerging business models based on the latest advancements are challenging the conventional segments of financial services. The ever-increasing rate of investment into banking innovations is further strengthening the build-up that can lead to disruptions in the financial sector. 

Financial institutions across the globe have taken various initiatives such as reducing the overdraft fees, eliminating overdraft protection absolutely to avoid any additional fee, and offering early access to direct deposits. But what does it actually mean when we talk about disruptions? 

While early access to deposits might be appealing, the actual returns gained from such additional features have not been so fruitful. Focusing on offering higher interest rates, digital banks have performed better than their conventional counterparts since 2001. However, the rate of transition of the customers from conventional banks to their digital competitors has been too slow. Real disruption would likely go beyond the current product offerings.

Coming to enhanced user experience, new competitors have come up with slick mobile apps and better customer support. Immediate notifications and better interface are also intended to attract the customer but are likely not to be attractive enough to influence mainstream customers, especially when higher interest rates couldn’t do the trick. So what will the actual disruption within the banking domain look like and how can it be achieved?

Here is an insight into it:

Holistic View of the Finances

Consider a bank that allows customers to manage their entire financial picture in one place. It implies that his complete financial operations such as savings and checking account, credit cards, mortgages, student loans, leases or car loans, brokerage account, retirement accounts, and even upcoming bills like wireless and rent can be managed from a single point of touch. Apart from the customer advantages, a single point solution will also mean more customer data for the banks for a more personalized user experience. Thus the financial institutions may demand softer regulatory measures in terms of data privacy. Ideally, such a setup would allow the user to manage entire financial obligations without ever leaving financial hub.

Actionable, Timely, and Unbiased Recommendations

Various financial ambiguities make the matter worse for those who wish to manage it on their own. For instance, should the tax refund be used for the purpose of student loan payment? What credit card matches one's spending habits? Many are even unaware of whom should they address such questions. Advancements in artificial intelligence (AI) have led the personal financial apps to offer automated financial recommendations to the customers.

Ideally, a seamless experience should also offer a simple button along with the timely suggestions for the customers to act on those recommendations. For instance, consider an impending tax return notification from a bank, accompanied by a push button approval to facilitate the customer if he wishes to proceed with the transaction. Such add-ons that offer unbiased advice can play a vital role in earning a customer’s trust. 


Dealing with financial overheads is often a tedious task for many. With the current advancements, offering an automated solution is well within the grasp of the financial institutions. Automated apps, savings features, and other similar technologies can assist the people with many tasks that they must deal with on their own. For instance, the automated apps allocate one’s money as per the financial commitments, thereby saving the user from complex mathematical calculations. The apps can also help the customers optimize and plan their payments to minimize interest payments as well as to improve credit by making extra payments to their credit cards.  

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