Financial Services

Top Challenges for Banking Services: Navigating the Evolving Landscape

cWhen was the last time you stepped into your bank or had a face-to-face meeting with your relationship manager? Tough to recall, right? The banking and financial services (BFSI) has undergone a massive transformation in the last few years. Digitisation has taken over most services and there is really not much of a choice in the face of increased customer expectations, competition and business demands. Human-centric banking is on the decline. However, consumer preferences aside, banks also face the heat from regulatory compliance and need to provide safe and secure digital banking services. The banking landscape is  rapidly evolving, and while incumbent banks were slow on the uptake, they now realise that their services need to ramp up to meet new challenges. Here are some of the top concerns.

Banks: Stumped but not out!

  • Digitisation challenges

  • Financial networks are increasingly becoming interconnected within the country and across the globe. Several key regions are seeing a tremendous rise in digital banking. Digitally savvy customers now expect banks to deliver services at their fingertips. According to a Forbes digital banking survey, 78% of people in the US prefer digital banking and more than half use digital wallets. The Asia Pacific (APAC) region is seeing a massive digital explosion, and is expected to become the world’s leading fintech market, with a compound annual growth rate (CAGR) of 27%, far outpacing the US. The growth in digital financial transactions in this market is expected to exceed that in the US and Europe by 2027. Stability and seamless operations would be vital for financial networks.

    In times of instant gratification and customers expecting extensive self-service functionality, banks will need to ramp up their systems and applications. Vetting new customers with ‘know your customer’ (KYC) and complex onboarding processes can be a deterrent to smooth onboarding. Automated onboarding with minimal human intervention is required to speed up processes. Growing cross-border financial transactions, the need for enhanced cybersecurity and migrating from legacy technology to the cloud are other top priorities. 

    With a technology-centred strategy, banks can offer convenient digital solutions to both retail and corporate customers. A robust technology platform combined with data analytics will provide deep insights and offer personalisation, a key requirement in today’s customer-centric world.  Embracing technology is going to be a key requirement for banks to improve client services and meet customer expectations. Apart from choosing the right solutions, banks also need to consider employee expectations, train employees on new technologies and processes and adhere to local regulations.

  • Ever-evolving regulatory compliance

  • With the growing number of fintechs and new-age digital banks, risk factors are increasing and so are compliance regulations. Banks will need to adhere to complex regulatory requirements regarding transparency and data verification. While AI is used increasingly for fraud detection and monitoring, the fintech sector is also one of the most impacted by deepfake cases. Fraudsters continue to adapt and AI-generated crimes pose a serious risk to the banking industry. As risks continue to evolve, so will regulatory frameworks, and banks will need to keep pace both with cybersecurity and changing regulatory requirements.

    Banks also need to comply with data privacy regulations, capital adequacy regulations and anti-money laundering (AML) regulations, all while causing minimal impact on customer service and experience. As non-compliance can result in significant costs and increased risk exposure, a culture of compliance is needed to be built within the organisation. Technology-driven systems and processes can help build standardised workflows and processes that can quickly adapt when rules and regulations change. Data analytics platforms can help banks derive insights, identify gaps that need to be fixed and minimise compliance risks.

  • Increased competition

  • New-age fintechs and digital banks are challenging traditional banks with innovative payment solutions, personalisation, convenient lending products and low-cost wealth management solutions. With increasing internet penetration and smartphone usage in developing markets, both technology companies and startups are offering financial services at lower costs than traditional banks. In the APAC region, government policies have spurred digital payments promoting a digital banking revolution. Banking services need to cater not just to the new-age consumers but also to the older loyal customer.  At the same time, banks must strive to meet investor expectations, create innovative new business models, and step up to remain ahead of the competition.

    The banking industry is entering a new era and needs to adapt to the challenges laid out by geopolitics, technological and macroeconomic factors. In a highly competitive financial services industry, banks need to embrace technology and adopt a customer-centric approach to stay relevant and give the competition a run for their money.

How can Infosys BPM help?

In a digital world and under the dynamic market conditions, banks need to rise up to meet several challenges in banking services - margin constraints, regulatory requirements and changing customer expectations. Infosys BPM offers specialised financial services to transform the  banking business process for both corporate and retail banking, helping their clients deliver  enhanced business values at reduced costs.

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