The new generations are changing the way they relate, travel, and manage their finances. The new generations are digital natives. Technology is an essential part of their lifestyle, and they fully trust it. The use of devices is the basis of many of their daily activities, and offline and online life is the same.
Banking Disruption
Recently, a study was conducted to identify the sectors most likely to be transformed in the future, and the conclusions place banking as the sector with the highest risk of disruption.
The study indicates that 53% of today’s generation between 15 and 25 years old does not believe that its bank offers a different service to the competition. One in three is willing to change institutions in the next 90 days, and 71% prefer to go to the dentist than go to a branch or listen to what their bank says. Additionally, the impact that fraud cases have had on the part of financial firms in recent years for the sector’s image.
In a radical change in the financial sector, the Fintech (Financial Technology) sector develops exponentially. It relies on digital technologies as new generations believe that technology generates trust despite little or no human contact. FinTech and technology companies such as Google, Apple, etc., will get a great stand out in the market for their banking services. It is the belief that 81% of young bankers. Also, 61% of them predict that these companies will influence daily payments in the future. As a result, banks will interact well with their clients through payments.
Challenges Ahead
Furthermore, 36% of bankers are sure about banks’ potential that they will keep up with the speed of development of other FinTech and technology startups. As per two-thirds of respondents’ prediction, a number of FinTech companies will be responsible for sending disruptive innovations. According to them, in this way, there will be pressure on the business model of banks in the upcoming years.
Bank’s business model has come under pressure due to the variety of innovations. Around 90% of cell phone payments, Internet of Things, NFC, and respondents. These technologies will have a powerful influence on the current business model. According to the prediction of 40% of people, cryptocurrencies that are bitcoin will have the most significant impact on the bank’s business model.
Based on the above statistics, respondents recognize the challenges. Also, they question the capacity of traditional banks as they are rising with the rate of change and advancement. According to 82% of young bankers, competition in terms of technological progressiveness is tedious due to the educational gap at a global level related to the latest technologies. Therefore, Next Generation must know the best way to compete, partner, or integrate with such technology companies to be relevant in the value chain of financial services.
Adapting to the Future
With these challenges, banks will be more technology-driven in the upcoming years, and they will potentially transform their working style in the value chain. Following generation banks will have to decide which technological abilities they need to construct in-house or attract by a partnership or joint ventures. They want to keep up with the quick pace of innovation. To provide the best client experience, the next generation may change into a network organization. It must orchestrate and connect various parties.
You must know a positive client experience that you drive through delivered service rather than products. Otherwise, you can quickly end up as a back-office for advanced FinTech solutions that a third party will offer.
A sizable number of new companies or startups have been born to reinvent the way people think and relate to money. Their models have made finances cheaper, faster, more accessible, and efficient for individuals and businesses. Take advantage of the explosion of technology to develop platforms focused on new generations and populations that have been neglected by traditional banking.
Conclusion
Understanding this new consumer sector will separate the leading players from the laggards in the financial system over the next decade. It will also be an exceptionally profitable competitive advantage for those firms that attract, retain, and enchant new generations.
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