Rapid digital transformation driven by COVID-19 has caused big banks to become innovative. Smaller financial organizations must follow the leaders to avoid being left behind, says Juniper Research.
Fifty-three percent of the world's population will be using digital banking by 2026, a report from U.K.-based Juniper Research found. That's nearly double the amount now banking digitally in 2021 (2.5 billion): By 2026 4.2 billion people will have access to banking-as-a-service online.
Citing the COVID-19 pandemic as a major driver of digital transformation in the banking industry, Juniper said that five banking groups are leading the industry: Bank of America, British bank HSBC, JPMorgan Chase, Spain's BBVA and Singapore-based DBS Bank. Each of the five banking groups listed by Juniper had a particular innovation or factor that made them leaders.
- Bank of America's Erica chatbot and other digital products "recorded significant upticks in digital usage and engagement during the pandemic.
- JPMorgan Chase has experimented with blockchain and made acquisitions that have aided its digital offerings.
- HSBC's Kinetic business banking app and associated online finance program has brought in new customers.
- BBVA launched several digital initiatives, including cryptocurrency trading.
- DBS Bank has overall "high levels of digital engagement."
"These banks have progressed with well-planned and executed digital transformation strategies, and other banks need to build similarly broad and revolutionary roadmaps, or they will be left behind by more agile competitors," said research co-author Damla Sat.
Digital transformation initiatives have benefitted smaller financial institutions as well. First Technology Federal Credit Union, designed to serve employees in the tech industry, rapidly advanced its digital transformation timeline due to the pandemic.
The pandemic was a huge system shock to the financial industry and its customers, said First Tech CTO Mike Upton, but members proved resilient and ready to adapt to digital banking tools. "We stood up a virtual experience center, we stood up bank by appointment and our members really gravitated to those things. And they really appreciated that flexibility. And we believe that quite a few of them are going to continue to use these digital services, digital channels, because they got comfortable with it," Upton said.
The pandemic caused a massive shift in new users to digital banking services, with daily new user numbers hitting a high of 41% over the baseline average in March and April 2020. Daily new users grew considerably as well, indicating that new users continue to use digital banking products once they begin.
Financial institutions, the report concludes, "should better integrate their many offerings into a single, consistent digital experience, to better compete with diverse competition" in the post-pandemic, post-digital transformation fintech world of 2021 and beyond.
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