Digital Transformation Trends in Banking: How to Buy More Clients in 2023

This year has been harsh for many due to rising inflation. And unfortunately, the economic instability will continue into next year.

This makes banks particularly vulnerable and results in tangible changes in banking approaches. Financial organizations accelerate digital transformation to keep existing customers and engage new ones. Such a focus on customers is traceable in most digital banking trends as banks strive to grow their customer base to stay afloat.

Binariks banking software development services provider shares our overview of digital banking trends for 2023 below. Follow these trends to improve banking services and get more clients next year.

Top 10 digital trends for the banking industry

This overview is based on the recent report by Deloitte and other reputable sources reflecting upcoming banking industry changes. It can help you plan your digitization efforts for the next few years to design successful products.

1. One-stop shop platforms for comprehensive services

Modern users have too many programs on their smartphones to keep multiple financial apps. Therefore, they prefer providers with all critical products in one platform. Recent research on the trends in digital banking showed that 73% of clients request digital account opening from banks. 63% need loan functionality, and 59% would like P2P payments. Some other top choices are financial wellness, chatbox/voice banking, and cryptocurrencies.

Requested digital mobile features

Hence, if you want to design a banking app that effectively attracts users, you must combine these features. The tendency to create all-in-one platforms has been for a while, but in 2023, it will become a must-have requirement. Digital apps that offer solely banking services will give way to multifunctional applications like Chime or Ally. The Chime mobile banking app enables users to get paid up to 2 days early, use credit builder, search ATMs, integrate a digital wallet, make P2P transfers, automate savings, and more.

2. AI virtual assistants and voice commands for instant customer support

Many major banks are launching virtual assistants to help clients manage online banking inquiries. These assistants use the power of artificial intelligence to complete basic tasks and personalize banking services. Many of them you can control with voice commands, another emerging digital banking trend.

As more people are getting used to voice-activated devices like Siri, Alexa, or Google Assistant, this technology is becoming more popular in fintech. Users can manage banking by telling a virtual assistant what to do instead of handling everything manually.

The solution by Chase Digital is one of the decent examples of digital bank assistants. It can help you pay bills, transfer money, check your account balance, and view investments. You can lock or unlock credit/debit cards and manage other regular tasks.

2023 will likely see more virtual assistants, both in-app and voice-controlled. Following such trends in internet banking, you can engage the tech-savvy part of your target audience who love innovations.

3. Cashless payments for convenient transactions

Сashless transactions offer the speed and convenience every customer wants. Developed countries such as Sweden, Norway, and the Netherlands may soon become cashless. The UK, Canada, and the US report the growing use of digital wallets and contactless tap-to-pay cards. Mainland China and India, on the other hand, adopt QR code technology for mobile wallets, digital payments, and super apps. This way, the cashless trend thrives globally. By 2023, the cashless transaction volume will more than double .

Cashless transaction volume will double by 2030

Developing a banking app, you must ensure it supports the main cashless payment methods, including:

• NFC or RFID technology
• E-wallets
• QR codes
• Virtual cards

You may also invest in the technology for PoS terminals. Physical, virtual, and mobile PoS terminals are highly demanded by small businesses that want to support cashless payments.

4. Self-service channels for small and medium corporate clients

Self-service is the future of digital banking. The pandemic has shown that small- and mid-sized businesses need the same self-service options as large clients. They want to integrate digital services through APIs into their platforms instead of going to a different platform. It allows businesses to optimize their internal operations and enhance performance.

Despite being one of the technology trends, frictionless digital experience for corporate clients is still a free niche. Only 39% of corporate executives are satisfied with issue resolution across digital self-service channels. 28% express satisfaction with account opening and onboarding.

Corporate executives are moderately satisfied with digital self-service channels

Hence, if you offer digital banking services to corporate clients, you should expand them and make them more easily accessible to SMEs. Many potential customers would love to have API integration capabilities to embed the functionality.

5. Mobile banking keeps prevailing over web solutions

In the US, 90% of Gen Xers prefer smartphone banking. The rate among elderly Americans is also high – 50%. To attract customers, you need a mobile app that outperforms competitors' solutions or is at least as good as theirs. A web platform is also necessary, but it's an addition to the mobile solution.

Digital banking is transforming, and consumers ask for mobile apps that handle every banking operation. By 2034, bank branches could be extinct . So you'd better start catching up with the tech trends in online banking now.

6. Investment in front-to-back modernization

While banks have significantly advanced in digitizing customer-facing systems in the last years, many still haven't aligned front- and back-office operations. As a result, they cannot fully benefit from the implemented upgrades. The performance and quality of banking services suffer.

In 2023, more banks will invest in front-to-back modernization to grow efficiency. They also power the modernization with low-code/no-code application platforms, RPA, and cloud migration to reduce inefficiencies. For example, Seacoast Bank developed ML models that estimate the CLV (customer lifetime value), entering every detail from teller costs to the probability of attrition. After an automated estimate, the system highlights the opportunities to reduce costs or improve customer engagement.

7. More banking apps for unbanked and underbanked

The US has the highest immigration rates. By moving to developed countries, immigrants get an opportunity to gain more financial stability, yet they also face many limitations, including inaccessible banking services. As a result, roughly 19% of the US population is underbanked or fully unbanked. It creates a tremendous demand for alternative digital banking services that allow the unbanked and underbanked to send and receive money.

Digital banking providers take steps to satisfy this demand. Simba is one of the cases. This app offers instant transfers and a branded VISA card after a quick registration. Since No SSN or ITIN is required, everyone can apply. Non-US citizens only need to indicate a passport and a US address. Such banking apps also support international transfers without exchange rate markup, becoming a perfect solution for immigrants. And as the immigration rates grow, we may see new apps for the unbanked and underbanked in 2023.

8. Spread of digital currency to retail

Blockchain, crypto, and other digital currencies are only gaining popularity as alternative payment methods among retail companies. Yet the adoption rates may speed up in the future. According to the Deloitte survey of US retailers, three in four respondents will start accepting digital currency payments within the next two years.

Retailers are preparing to accept digital currency payments

87% of the surveyed retailers believe that organizations that support digital currencies have a competitive advantage. That's the main reason to implement digital currency payments in your online store, along with an increased reach. Such innovation will allow you to cover more potential leads by serving those who use digital currency wallets.

9. Omnichannel services organized around the customer

Omnichannel tendencies are strong in many industries, and digital banking is no exception. With the transition to online banking, customers use more channels to interact with a financial organization. It was found that retail banking customers navigate 2.7 channels during every interaction.

That's why digital banks that want to keep customers satisfied must ensure a consistent omnichannel customer experience. The UX must be equally smooth whether the person uses one interface or goes from a mobile app to a chatbot to a web platform. 

You must invest in UX analysis to ensure quality user experience across every channel. It helps detect bottlenecks and pain points to enhance the design. The quality integration between channels is also essential as it allows you to gather all data related to one customer in a single admin platform. 

10. Biometric security adoption to protect user personal data

Biometric security is one of the newest digital technologies for banks. While cyber-attacks keep growing, financial organizations seek new ways to prevent data leakage and unauthorized access. Biometric user identification is a good solution since it uses unique data. Falsifying a fingerprint or voice model is much more complex than guessing the password to access an account.

This and other benefits of biometric scans make financial organizations implement biometric security checks in digital banking apps. Users only need to put their finger on a scanner or look into a camera to authorize.

As more people get smartphones with facial or touch recognition, this technology becomes available to a larger audience. This is another reason biometric security solutions will become more widespread in 2023 and beyond.

Key statistics on digital banking technologies

The expanding generation of millennials is nudging banks to adopt digital banking services, which drives the market surge. By 2028, the digital banking market will surpass .3 trillion , up from $7.9 trillion in 2021. The number of digital banking users will reach 216 million in 2025 in the US only.

Besides the rapid market growth, the increasing adoption of digital technologies for banks also considerably affects the industry. In particular:

• 84.7% of financial institutions already report RPA implementations. Robotic process automation helps financial services achieve 20%–60% cost savings of baseline FTE costs.
• AI in banking offers a $199 billion cost-saving opportunity for the front office. The middle and back office savings are $217 and $31 billion, respectively.
• A fully digital KYC model can save over $460 million in banking onboarding. At the same time, 78% of organizations admit they still cannot provide an optimized digital experience.

These are just a few examples of how technology impacts banks and financial firms. Innovations increase revenue, optimize expenses, enhance customer satisfaction, increase operational efficiency, and bring many other benefits.

Our experience

Binariks is a software development provider you can hire to implement innovative digital banking technology in your organization. We have experience with complex cloud migrations, AI implementation, biometric security systems, and digital currency. Our team also provides standard engineering services for web and mobile development. 

We can assemble a dedicated team for you to develop an app from scratch or integrate a third-party solution. You can also hire Binariks for consulting services or part-time involvement, depending on your needs.

Learn more about our completed projects , and contact us to discuss your tech needs.

Final thoughts

In 2023, many digital banking providers will keep going through digital transformation. The main trends remain unchanged – AI, omnichannel banking, focus on mobile, and customer-centricity. Still, next year, we can see a significant increase in biometric security adoption and the expansion of cryptocurrency to retail.

All these innovations have one thing in common. They are technically challenging and require specific expertise. Hence, you will need an experienced software engineering partner to implement them successfully.