From the Great Recession to the COVID-19 pandemic, the banking industry has seen many changes come it’s way over the past five years or so. As a result, the industry itself has had to adopt many new ways of doing business to reflect market movement. One of the most competitive industries within the business world, banks big and small are doing all they can to attract and retain customers. As to which trends have been at the forefront over the past five years, here are some you’ll probably recognize.
Digital Innovation
Banking today is very different compared to the original banks but a lot has changed even in the last five years. The use of cash and written books, for example, is among the many things that have changed. Over the last few years, more and more banks have embraced digital innovation in every way possible. The most common way is by creating or improving their apps since customers today expect to be able to conduct most of their standard banking transactions online. Apps aren’t the only digital innovations, the entire banking industry is being uprooted by the blockchain industry. Instead of going through banks to complete transactions, transactions are verified through the blockchain. Though it is still newer to the industry, it is a movement that will likely continue to grow.
Fewer Physical Locations
The banking industry has always been based on physical destinations for people to visit for their banking needs. Now that bank customers conduct many of their transactions online, one of the biggest trends in banking within the last five years is having fewer brick-and-mortar locations in towns and cities. Due to the high costs associated with building and maintaining physical bank branches, banks are rapidly downsizing their physical locations in an effort to reduce operating costs and pass on those savings to customers. Additionally, there are typically more employees at corporate locations for remote customer service instead of in the past when you had to bring your driver’s license to prove who you are. A major change regarding physical locations is that you can get approved for a mortgage online instead of talking face to face with a lender.
Nontraditional Lenders
Banks have been loaning people money for many things over the years including cars, homes, and business funding, among other things. One of the most common of these loan types is mortgages. A mortgage lender provides the funds needed to buy a home. Whether you are seeking a mortgage lender or looking for funds to buy a new car or business, a major banking trend has been the emergence of nontraditional lenders. Due to consumer demand for low-interest rates on loans and added flexibility in paying back loans, banks have adapted to this by revisiting loan requirements, creating new divisions within loan departments to focus on creative financing, and aggressively marketing their loan offers to customers on all financial levels. Some of this has affected home mortgages but it has even more so affected business lenders. If you want to fund your business, you are no longer limited to traditional lenders. You can go through programs such as crowdfunding on Kickstarter, Indiegogo, Patreon, GofundMe, and other crowdfunding sites. This means that people don’t have to go through a bank to get funding. Though the impact on the banks is clear, it’s likely that banks will continue to make adjustments to be more enticing for those that have a choice between going through a bank and sourcing funds elsewhere.
Renewed Focus on Regulations
As the Great Recession showed the nation, some banks had up until that point focused little if any on regulations for borrowing and lending money. As additional issues have arisen in recent years, banks are now having a renewed focus on following regulations to the letter. From credit policies and risk management to everything in between, banks are wanting to show customers they can in fact be trusted once again. In the last five years, for example, FFIEC cybersecurity compliance guidelines have been updated due to the scope and scale of cyberattacks. These regulations affect retail transactions, education, banking, government, healthcare, and even manufacturing.
New Security Protocols
Back in the day, the only way to rob a bank was to walk into a brick-and-mortar bank. With the innovations in the digital utilization of banks, this has changed significantly. Security breaches have continued but in the last five years, there have been many security companies and protocols that have helped fortify online bank security. It is still a continuous issue, especially considering that anyone in the world with an internet connection can access a bank. However, with continued improvements to security protocols, it is likely that banks will move into an even more fortified banking system.
The banking industry has changed a lot over the years, especially in the past five years. These trends, along with ones such as expanding their revenue streams to include digital currencies, show that the banking industry is having to take notice of market conditions and adapt accordingly. By paying attention to the past trends, we can make considerations for market movement in the future. In the years ahead, these and other trends will reshape the banking industry into one you can expect to be safer, better regulated, and able to offer you more services. Whether you’re in the banking industry or maybe interact with the banking industry, understanding these trends can help you be more informed.
