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The Future of Banking

The Future of Banking 1

By Nigel Moden, European Head of Banking at EY

The world of banking is changing – faster than ever. Faced with technology developments, and evolving customer demands –  banks must think carefully about their future and the strategy they need to remain responsive and relevant.

As well as facing a more competitive landscape with new market entrants, banks are also working within an ever-broadening ecosystem, in order to help access new technology, create new products and services, and grow revenue with an entirely new customer base.

So, what will the ‘future bank’ look like?

  • The future bank is digital

The lines between banks, fintechs, and big tech companies will continue to blur. Technology companies that would not be classified historically as ‘fintechs’ are working to gain more control of business banking and payments.

But the real change is being driven by the customer. Changing customer behaviours mean banks need to curate unique journeys and propositions to meet evolving customer expectations.

The future bank will combine digital speed and convenience, in a way that is thoughtful and caring, at crucial moments in the customer journey. This is already happening in payments and will gradually creep into lending and savings.

Banks will also leverage ‘open banking’ to become more customer-oriented and tech-savvy. Historically, banks have been big collectors of data, but not great users of it. Greater use of data analytics, utilizing cloud and AI, will facilitate a better understanding of customers, identification of business opportunities, and reduction of costs.

  • The future bank sees fintechs as a payments partner

Payments data is at the core of banking. The future bank will increasingly convert data into insight, and insight into sustainable value, to create new revenue streams and build trust with customers.

Collaboration within the payments ecosystem will allow banks and fintechs to play to their strengths. Through partnerships or investment relationships, banks will work with fintechs to better understand and influence payments technology.

Banks will also incorporate their inherent advantages – strong balance sheets, deposit funding, customer data, regulatory expertise, and trusted local brands – to make the payments experience more personalized.

  • The future bank is customer obsessed

Banks will increasingly offer tailored, highly personalised customer experiences – all powered through data and technology.

Banks that demonstrate the greatest empathy with customers will be able to offer more distinctive, attractive personalized banking experiences. Customer-forward firms in sectors like leisure and entertainment have revolutionized their industries.

Banks have historically operated on an inside-out basis, creating products and solutions to fit their businesses, rather than fitting their businesses to customers. This fundamentally limits integration across products and services, and leads to inconsistent customer experiences. It is also opposite to how fintechs operate, creating solutions and entire business models centred around customer experience.

  • The future bank has more diverse talent

An area of emerging concern in banking is the ability to acquire and retain key talent, especially in the areas of digital and technology. This will be a core focus for banks in the coming years as they align hiring plans with tech-enabled growth opportunities.

Cybersecurity, AI, and digital transformation were identified in  the recent EY European FS CEO Imperative Survey as the top-three emerging skills required for c-suite development over the next five years.

Banks will maintain existing mainframe infrastructure skills, while simultaneously embedding new skills to enable them to embrace emerging technologies, including AI and cloud.

The future bank will also be defined by its culture of inclusive leadership – where leaders use D&I as a lever to help them develop more innovative teams and solutions. to support a more diverse customer base.

To achieve this, banks must embed inclusivity across their entire talent infrastructure – from the type of people they hire, to how they reward their people, to the types of leader role models they promote.

Most importantly, the future bank will be able to translate all of this into a highly attractive, competitive employer brand, which captures the imagination of highly ambitious, extremely mobile talent in a hiring environment where banks compete alongside big-tech brands for talent.

  • The future bank is sustainable

For the first time, climate change tops the list of long-term risks for banks, according to the 11th EY and Institute of International Finance bank risk management survey. The survey of 88 financial institutions across 33 countries provides a window into the changes in risk management seen globally during the past decade, and the major risks anticipated over the next 10 years.

More than nine in 10 (91%) bank chief risk officers (CROs) view climate change as the top emerging risk over the next five years. Only about half (52%) of CROs said the same in 2019.

There is a growing expectation that banks do more to protect workers and build a stronger economy and society. This is more than a reputational imperative. Investors and customers will increasingly use ESG metrics information to determine a bank’s value.

Managing the economic risks of climate change will be central to the future bank’s overall risk management strategy. They will incorporate climate decisions into product innovation, capital management, business planning and strategic transactions.

The future bank will have the ability to easily assess risk exposures; currently, only 54% of banks have a preliminary understanding of this. It will incorporate climate risk into its corporate business strategy, existing risk assessments and active risk monitoring.


Banks are under pressure to go further and act faster than ever before. They are making transformative changes to become more competitive in a rapidly evolving marketplace. They are also adhering to increasingly challenging regulation, while helping to solve societal challenges. And they are doing all of this while operating in a low revenue-growth environment.

In their race to innovate and achieve scale, banks are grasping a once-in-a-generation opportunity to accelerate transformation and define their own future.

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