Ncr Predicts Banking Trends for 2021

This year, banks and credit unions were forced to face previously unthinkable challenges. They had to determine how to operate remotely, make their branches as safe as possible, and quickly shift to a hyper focus on digital initiatives. Now that the initial shock of the pandemic has waned, bankers are refocusing priorities and planning for what 2021 might bring. NCR, a banking software and services leader, today shared perspectives on the banking landscape and trends to watch in 2021.

Channels quickly collapsed in 2020 as digital and physical experiences merged; this is only expected to accelerate next year. The traditional channel model was put to the test over the past year; institutions’ servicing models were significantly disrupted as they were forced to operate with mobilized workforces, causing channels such as branches and ATMs/ITMs to radically change on the backend. Even during the need for physical separation, customers still wanted and needed the option for assisted self-service and human interaction. Options like ITMs gained popularity and delivered significant value, as they allowed customers to interact and transact with live representatives through video capabilities. Experiences were ‘de-channeled’ as physical and digital experiences converged.

Banks and credit unions are now operating in a more dynamic, distributed model, causing de-channeling to occur at a rate much faster than initially expected, in some cases three or more years ahead. What have traditionally been channel-specific experiences are being made ubiquitous across the bank through software that can connect those experiences. Those that embrace this shift toward digital-first banking will be positioned to compete; those that don’t will fall behind. 

Branch strategy will shift to accommodate the evolution of self-service. The pandemic significantly reduced cash usage in the short term and still restricts branch access, causing banks and credit unions to reimagine how to evolve self-service to maintain member confidence and trust. The effects of the pandemic on consumer behavior will echo for a generation and, as a result, how consumers and institutions interact will shift long term.

Branches will remain relevant, but they must adapt to become part of the larger ecosystem. There will be a continued evolution of self-service, one that includes leveraging technology to provide touchless alternatives and increased automation to enable continued access to cash. For example, there will be an increase in ITMs, tap-and-go-style transactions, pre-staged ordering and authentication, and mobile-initiated cash withdrawals.  

The ATM will remain a critical touchpoint and utilize expanded functionality.

Post-pandemic and beyond, institutions will emphasize expanded functionality at the ATM, including cash recyclers and enhanced multifunction ATMs that can complete up to 95% of traditional teller transactions through software enhancements. More institutions will consider transferring the burden of machine maintenance and updates to a trusted partner via the cloud. Such a hosting option makes the self-service channel simpler by offering a better, digital-first customer experience while reducing the total cost and onus of ownership. The ATM-as-a-Service is model is expected to quickly gain traction next year.

An increased focus on end-to-end delivery and management. 2020 put a strain on banks and credit unions as they were challenged to quickly deliver new features and services, such as skip-a-pay programs, PPP loans, changes in card limits, etc. The constraints of the aged, siloed systems and infrastructure institutions have relied on for years, even decades, were brought to the surface.

This year, the number of apps consumers leverage to manage money increased. Not only has digital banking adoption and usage gone up, but niche apps for areas such as investing, financial education, and credit score management have concurrently skyrocketed. Banks and credit unions must be able to offer more features and functionality, intelligently connecting to and partnering with providers of choice. This is another reason dated infrastructure will no longer suffice.

Consumer behaviors will be dynamic into 2021 and beyond. Being able to quickly modify digital experiences and business structures to accommodate customer needs and provide a consistent user experience regardless of channel will be a competitive imperative moving forward. This is all part of the profound shift toward digital first banking. Such an approach better positions institutions to take advantage of growth opportunities and fill an untapped need for customers and their communities. To be more responsive, institutions will look to more modern systems and architecture that allows better digital engagement integrated into the full delivery model. 

Small business earns bigger focus. The pandemic disproportionately impacted small businesses and gig economy workers; they faced a drastic liquidity crisis. Small and micro businesses have experienced a heightened need for financial advice and guidance. This year, we saw many community and large regional banks step up and help businesses through PPP loans, even when the national institutions elected not to. This has caused the smaller and mid-tier institutions to win market share and gain new business accounts, a significant opportunity.

However, there is still much work to be done. As small businesses look ahead to recovery and the gig economy finds their footing, institutions must place more of an emphasis on providing the relevant tools and services (especially through digital channels) this group needs to prosper.

“On the surface, it may seem that adapting to our collective, new reality in 2021 is complex, especially for small to mid-size financial institutions,” said Frank Hauck, president and general manager, NCR Banking. “The good news is that the self-service technology is here to help all banks and credit unions meet their customers and members where they want to be. As the leader in self-service banking software and services, we’ve seen those that take these steps succeed and retain market share.”