The Future of Banking

Poonam Rao
5 min readDec 17, 2021


Christine Roy. Unsplash

In the last 200 years while the primary function of banks remains unchanged, the methods of delivering those services has drastically evolved and transformed. Fifteen years ago, a customer would visit a local bank branch for a bundled stack of financial products — be it opening a savings account, availing a personal loan, mortgage, student loan, or applying for a credit card. The global banking industry competitive has intensified in the last decade creating a pressing need for the laggards to transform to deliver richer customer experiences and stay relevant. With competitive threats from fintechs and technology giants, incumbent banks sense urgency on digital transformation to protect their advantages.

Today, financial technology companies are using differentiated products to acquire scale much efficiently and faster. Luring a growing customer base with free brokerage accounts, free credit scores, free person-to-person payments, high-yield savings, and cryptocurrency accounts to gain a strong foothold.

Future of Banking — What are the trends at play?

The future of banking will be much different, integrating disruptive technologies to achieve growth and scale.

  1. Offline to Online Growth: The current market for digital banking is estimated to be $12 billion and projected to grow to $30 billion by 2026 with a 15% CAGR. The digital channel adoption amongst consumers has accelerated with complete mobile ubiquity and connectivity for all of their banking and financial needs.
  2. Digital First Platforms: Consumers are increasingly trusting big tech platforms, apps and fintechs. The APAC market shows increasing adoption of cashless transactions, “one-click” and “one-tap” services using smart phones. Digital Onboarding and building on expanded modes of digital payments are becoming a norm.
  3. Stronger Personalization & Tailored Product Experiences: Consumers have a strong preference and expecting integrated experiences across providers and services. Heightened customer expectations is driving a distinct shift and focus in customer-centric solutions and experiences in order to maintain relationships.
  4. Neobanks / Virtual banks / Internet-only banks: Neobanks are gaining ground especially among the Millennials and Gen Z who prefer digital onboarding and frictionless payments. By 2024, there will be 48 Million digital-only account holders in the US and 27% of global consumers have relationships with neobanks ( 37% of these consumers are Gen Z. APAC Market leads the neobanks space at 35%, LATAM at 25%, Europe and US at 19%.
  • Cryptocurrency Asset Banking: The crypto industry is largely unregulated. Currently 4% or roughly 300 million consumers use cryptocurrency. In the next decade, 90% of global population is predicted to adopt it. Adopting cryptocurrency can take banking to the next level of innovation by offering it as an asset class to investors. In March 2021, Morgan Stanley became the 1st US bank to offer bitcoin to high-value customers spurred by the demand from wealthy clients. Meanwhile China announced all cryptocurrency to be illegal including Bitcoin, Ethereum, and other budding startups with the intent to make its central bank digital currency digital yuan aka Digital Currency Electronic Payment (DCEP) front and center, a project that People’s Bank of China (PBOC) embarked on in 2014.
  • Blockchain Technology: Cryptocurrencies are built on blockchain technology. The promise of reduced transactions and operational costs, real-time gross settlements, faster payments is appealing with the potential of a cashless economy. Today, a Bitcoin transaction take approximately 10 minutes to settle. While not yet real-time it is far better than a typical 3-day settlement cycle offered by traditional banks.

Gone are the days where consumers banked with a single bank for eternity. Today’s customer has multiple credit cards and actively shop for best deals. The bank where your payslip gets deposited may not be the bank that you have your home mortgage with. Banks will need to compete on multiple fronts of products and experiences.

Ongoing customer persona and subsegment analysis across age groups, wealth tiers, genders, generations and ethnicity will be key to understand not only the banking behaviors, patterns and preferences but also addresses their fears, reservations and aspirations.

  • Curating Value through Data Mining and Embedded Finance: The wealth of data banks have on when, where, how and how much their consumers shop is valuable to design an integrated and holistic digital ecosystem, offering products and services based on consumers social styles, financial goals and aiding in educated financial decisions and overall improved financial wellbeing. Leveraging data to define customer segments, develop product and enrich customer lifetime journey will help create seamless, connected journeys and customer experiences.
  • Strengthening Relationships and Increasing Share of wallet: Traditional banks will need to offer more than anchor product like lending and savings accounts while competing with free services provided by market entrants. Stacking more products and services under one roof with unified relationships will lead to increased long term customer tenure. Ample opportunities exists to penetrate with high-value products like investments, insurance and loans that are aligned to their customer base and being a day-to-day companion for consumers in their daily decisions.
  • Growth Levers — Tapping the Underbanked and Unbanked B2B and B2C: In the B2B space this includes small to medium enterprises (SME) and “gig economy” consumers that constitutes independent contractors and freelancers. MasterCard projects gig economy transactions at $500 billion by 2023, with 17% CAGR. For instance, in 2019, Uber launched its own debit card Uber Money, embedding banking as part of its driver onboarding process, thus creating a frictionless experience for its mostly unbanked drivers and creating value by providing multiple same day payments to drivers. According to FDIC research from 2017, nearly 25% of the US households are unbanked or underbanked. In the B2C space, rural markets, female customers and unbanked urbanites presents market expansion opportunities.

Getting Ready
Strategy formulated based on a customer-centric approach, driven by innovation and rapid transformation will be key to future growth. Incumbent banks will need to continue meeting customers current needs while evolving to meet future needs that align with new market developments. Ecosystem business models with thoughtful strategic partnerships will be critical that provides seamless and intuitive ecosystem experiences to consumers. Operational and Business models will need to be optimized to deliver sustainable returns. Platform enablement that promotes operational reliability and resiliency is the key mechanics of scale to accelerate the digital transformation.

Differentiation in products and services across regional markets based on customer preferences will be crucial. For instance, Mainland China and Hong Kong markets prefer payments benefits while US and UK markets value rate benefits. In a world where customers don’t think twice about switching, generic marketing campaigns will fail. Consumers who are delighted by their personalized banking interactions will stick. Honing and delivering on optimal experiences by customer segments and treating them uniquely at each-and-every touchpoint across channels, lines of business will ensure loyalty and protect against attrition.

Key Metrics to Track
Leading and Lagging measures of success include # of Financial Relationships per customer, Customer Tenure and Wallet Share.

Future Deal-Activity Outlook
Big Tech and Fintech players have the capability to scale rapidly and will be seen intensely competing with traditional banks. We might see increasing mergers or community and regional banks and acquisition by fintechs and technology giants.


Bank of the Future. Goldman Sachs Insights
Banking & Capital Markets. EY
Neobanks Explained.
MasterCard Insights. MasterCard
Uber Bank Newsroom. 2019. Uber
Underbanked and Unbanked in US. 2019. CNBC



Poonam Rao

Exec Director StratEx - I bring to the table blend of data science, finance and strategy management skills with 20+ years of experience in insurance & fintech.