The digital transformation in the financial sector is creating a major revolution for the banking industry. Technological progress is enabling banks to expand their services and to meet the new expectations of their customers. Today’s customers are increasingly looking for simplicity, accessibility, flexibility, speed, and optimal banking costs.
How is digital technology being used in this sector and what important innovations lie ahead of us? Discover the latest, rising trends in digital banking in our article.
This is an overview of the new digital trends in Switzerland and the rest of the world in 2021:
Switzerland remains the leading country for innovation
Geneva’s banking industry favors technological innovation and is adapting to “Y” and “Z” generations, allowing them to stay relevant and on-trend. Indeed, in 2020, Switzerland ranks among the most competitive and innovative countries in the world according to the World Economic Forum and the IMD. It is investing in digital technology and successfully coping with the global, technological shift. In its survey on “Digitization and Fintech in Swiss Banks 2019”, published in August 2019, the Swiss National Bank (SNB) notes that banks see digitization primarily as an opportunity, especially in reducing their costs and increasing the quality of their services. For this reason, FINMA has recognized the growing importance of technology and created a “License Light” that enables customer identification online or via video. Swiss banks have thus been able to explore new digital possibilities while preserving the key strengths of “Swiss Banking” which include financial competence and reliability.
Switzerland is a financial center that aspires to become an international hub for sustainable finance; a pioneer in the field of financial flows and sustainable financial services. More and more banks are taking part in international initiatives on transparency with regard to the risks inherent in ESG (environmental, social, and governance) factors. They are expanding their services to include ESG factors such as Green Bonds, sustainability, and social bond offerings.
During the global pandemic, five key trends in the Swiss banking sector have been identified, including:
- Digitization is being used more often within banks: electronic signatures, state-recognized e-ID, etc.
- Customers expect more digital financial services, including personalized and digital follow-ups.
- Alternative payment methods are becoming commonplace, including mobile and contactless payments, bank transfers, and e-purses.
- “Smart working” has become more popular and flexible work forms are being encouraged.
- Investment in security and digital infrastructure is increasing.
The Swiss Bankers Association is focusing on the following key aspects to ensure Switzerland’s competitiveness as a financial center in the world:
- A revision of current obstacles in the market preventing digital business models
- The Blockchain: it reduces customer identification costs. Customer data can be accessed more quickly, resulting in a more efficient authentication process. For customers, it reinforces their rights: they are the sole owners of their digital identity and have a code to access their personal data and certificates. Asset tokenization also opens up new opportunities as it consists of converting the rights to an asset into a digital “token” that has the advantage of transparency, efficiency, and security.
- An electronic identity: this consists of setting up a government-recognized login that allows users to identify themselves on the Internet in a clear, secure, and user-friendly manner. The e-ID is extremely useful for administrative matters, making transactions more efficient in business and customer relations, and increasing the security of identification on the Internet.
- Outsourcing and cloud computing services: the migration of banking IT systems to a cloud will increase productivity and incur lower costs. Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (for example, networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.
- Cybersecurity: This is one of the greatest concerns in digital technology. So, the creation of a cyber defense campus and a security competence center is essential for many banks that wish to go digital; the implementation of a crisis mechanism within the banking sector is also essential. Cybersecurity training needs to be taken into consideration and done by specialists.
- Open banking: This involves the mutual exchange of data. It is a value-adding factor for all stakeholders, customers, third-party providers, and banks.
- The use and evaluation of Big Data using RegTech. RegTech uses information technology to enhance regulatory processes. RegTech would improve compliance at a significantly lower cost.
→ From Big Data to Smart Data in the banking sector
In 2020, UBS announced that it will start a new initiative to raise funds for Fintech start-ups. The aim is to promote start-ups in the financial sector and drive their own digitization. A year ago, UBS opened its “Digital Factory” innovation laboratory in Zurich. A place where companies, developers, and clients are invited to work together in an agile manner. It is a way for the bank to develop IT solutions more quickly, but also to reinvent itself internally.
Another company that is taking the digital revolution in its stride is Credit Suisse Asset Management that has decided to participate in the creation of a new framework, the i.AM Innovation Lab. This innovation lab aims to remain at the forefront of the sector and to design tools to accompany and shape change. It uses IA-assisted asset management consulting and offers a first glimpse into the digital world of asset management to many investors. Technological advances are driving the financial sector forward, which is becoming more personalized.
- The easy way to pay online, fast
Instant Transfer is a new and free payment method that allows you to send money to another account in less than 10 seconds, at any time of the day and on any day of the year. This method is a new alternative for online payments. Floa, the leader in web and mobile payment solutions, has already started to deploy Instant Transfer offers using Open Banking. This technology allows banks to share their data with other industry players, including Fintech.
This new offer from Floa, developed in partnership with Bridge (a technology developed by Bankin‘) allows you to initiate, directly with your bank, an easy and instant transfer.
By 2022, it will probably become commonplace to pay in physical stores via instant transfer.
- Paperless pocket money for your children
Boursorama Bank has just launched a new type of bank account for children, called Kodar. This offer allows parents to provide their children with digital pocket money paid. Thus, children can then pay with a contactless card, which is an important asset, especially during this global pandemic. It also helps parents teach their kids to be responsible with cash and digital money. However, these accounts are only accessible for children aged 12 and over.
Similarly, there is a digital banking solution that has been developed by the company Money Walkie, in partnership with Mastercard and Treezor, that is just as creative: it is a contactless wallet. It has the appearance of a small animal and allows children to digitally pay small sums of money, for example, when purchasing sweets, ice cream, etc.
These tools aim to make children financially responsible from an early age.
- 2020: the year of contactless payment
Covid-19 has accelerated the democratization of contactless payment via mobile phones. This method of payment has the dual benefit of not entailing any additional costs for the customer and also of not risking any contact with the virus. Consumers are steadily becoming more inclined to pay with their smartphones. For example, Stéphane Vallois, Orange Bank’s Deputy CEO highlighted that “Mobile payment represents 20% of Orange Bank’s card payments, versus less than 1% for the market as a whole“. The digital market is becoming more significant in the banking sector, shifting consumers’ perceptions and habits. Apple Pay, Google Pay, Samsung Pay, and Paylib are becoming more and more popular. There are advantages to this payment method, for example, “unlike contactless, there is no cap on smartphone payments. The only limit is the credit card limit,” highlights Maxime Chipoy, the manager of Meilleurebanque.com. Contactless payment is a really attractive solution, but unfortunately not accessible to all because not all banks offer mobile payment solutions yet.
- Automatic savings
Automatic savings is intended to help young people to put a little money aside to finance their projects, especially as it the younger generations that generally find it hardest to save.
For this, Yeeld, a savings application launched in 2019, allows you to put money aside in a fun way, by setting yourself an annual challenge: you save 1 euro on the 1st week, 2 euros on the 2nd… and so on until 52 euros on the 52nd week.
There is also Plum, an AI assistant that follows the same principle and has a few additional options such as “rainy days” savings for example, which allows you to decide how much money you want to put aside each time the weather is dismal.
Cashbee is another revolution in financial technology. This application analyzes your accounts and tells you how much money you can save or invest, depending on your objective.
- Teen banking: