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Banking has undertaken an exhilarating journey of transformation in the past couple of decades.

We have witnessed the appearance of mobile banking applications, which initially existed to complement service provision at banking halls. We’ve watched the emergence of fully digital financial institutions that do practically everything we expect of physical banks, but via online platforms. And we’ve seen traditional banks race against time to adapt to the disruptions that their new digital competitors have sparked in the industry.

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But this revolution is only starting to take shape.

In the years to come, there will be even more changes to banking as a phenomenon. While predicting this for every aspect of the financial services landscape might be a hard ask, it’s possible to sketch a decent outline of what the bank of the future would look like. And that’s what we’ll do in this article.

Here are some of the things you can expect to see in digital banking over the next decade.

Decline Of Brick And Mortar Banks

Admittedly, this will take place beyond smartphone screens, where most of tomorrow’s financial transactions will be carried out. But it’ll happen because more people, numbering in the millions, will have gotten onto digital banking platforms. As the percentage of Nigerian adults who use smartphones increases, there will be a significant uptick in signups for, and use of FinTech tools, including digital banks.

It’s unlikely that brick-and-mortar banks will disappear within this timeline. But we can expect fewer of them to open, and many of them will shutter permanently. This will almost certainly be the trend in the not-too-distant future.

Dominance Of Digital Wallets

If you had told anyone thirty years ago about debit and credit cards, they would have marvelled at the idea. Today, those cards are commonplace. But in a few years, we’ll begin to see less of them. That’s because the world is already moving away from them and towards cardless transactions.

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Cards are currently still a preferred option for payments. But as digital wallets become a more popular feature of FinTech apps, a growing number of users will initiate transactions from them instead. We’re seeing a lot of this in Asia, for instance, where a large percentage of users have adopted this alternative for payments.

Emergence Of Super Apps

At the moment, FinTech comprises a variety of service types: banking apps, payment platforms, digital brokerages and wealth managers, savings apps, online lenders, and insurance platforms, to name a few. But the lines between these services have begun to blur, as many FinTechs in these and other categories have started to branch out into one another’s turfs. Some startups started as online lenders and now offer full banking services. Others began as purely banking platforms but are now adding wealth management to their product lineups.

The trend elsewhere in the world suggests one thing: the emergence of super apps from a landscape of variegated FinTech companies. This has happened in South Asia, where a few super apps offering several services besides core banking have surfaced.

Hyper-Personalized Service

Artificial Intelligence (AI) will have a tremendous impact on banking in the coming years and decades. Once deployed in limited use cases, it’s now being utilized in a growing number of instances related to the provision of financial services. These instances range from automated customer helpdesks to quicker and better credit scoring.

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When combined with the huge tranche of customer data that’s available to banks, AI is able to ‘detect’ and ‘define’ consumer behaviour patterns. Armed with this information, digital banks can tailor their services to meet the very specific needs of their customers. This is already starting to happen, but it’ll get even more personalized as AI technologies grow in sophistication.

Cost Reduction, Thanks To The Blockchain

Digital banks generally don’t incur as many overhead costs as brick-and-mortar financial institutions. However, they often still have to grapple with transaction costs. Often, these costs are passed on to customers, who may pay a token to have their withdrawals and payments processed.

The blockchain could redefine this reality. Not only does its distributed ledger system guarantee transparency and security, but it also practically eliminates transaction costs. This could be a boon to banks and their customers. The benefit extends to international transfers (besides the truly borderless transfers that the blockchain enables).

Final Words

Tomorrow’s banks will be virtual, closer, and almost boundless. The improvements that arise from this will be many and varied—so great that banking could be utterly transformed in just a decade from now. It will be interesting to see how it all pans out.

Featured Image Source: Forbes
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This article was first published on 28th October 2022


Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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