The next disruption for finance is coming from big tech – can banks keep up?

In 2023, over 50% of all online purchases were made using a digital wallet. Amazon is now taking things a step further in the US with Amazon One. This will allow American consumers to pay at over three million locations using just the palm of their hand.

For big tech, adding a bank account and related products is a logical decision. The easier it is to buy things through them, the more they will benefit. They have an added advantage: they don’t need to rely on banking products to earn their money. Advertisements and kickback fees are their main income.

However, Apple already offers a credit card and savings account (in partnership with Goldman Sachs), cleverly combining traditional banking benefits – like no fees – with a seamless experience fully integrated into the Apple ecosystem. Offering attractive financial products will just help accelerate this flywheel.

Banks bite back

Banks need to go beyond delivering their core features – like big tech is now reaching beyond its initial function. To thrive in this changing landscape, banks must invest more than ever in providing meaningful value to customers.

Banks should redefine their role in consumers’ lives. Some steps will feel intuitive, and in certain areas, many banks are already making good progress. However, other aspects will be new to them and may even feel contradictory to the business they do.

Embracing open banking and working together to create industry standards would allow banks to join forces with fintech companies and other sectors to develop innovative products and services to make it easier for consumers to pay for purchases, manage their finances, and share data with third parties.

Allowing customers to link accounts and integrate banking products and services into external platforms would also change their experiences. For example, from enabling the integration of their crypto or even Roblox wallet into their banking app to offering smart, data-driven advice based on their profile, behavior, and financial situation. Facilitating the connection of accounts to a broader range of services could also prevent big tech from monopolizing areas like digital payments.

Meeting customer need

Focusing on services and programs that extend beyond traditional banking will help set banks apart. Broadening digital offerings that meet real customer needs and concerns is how banks should leverage their traditional experiences into their future activities. This could be anything from payment-driven rewards programs to new digital services for financial advice, insights, and control.

The ability to personalize financial services and experiences offers a clear advantage for consumers, but there are potential privacy concerns. It’s a complex challenge, but ultimately, customer trust should remain paramount.

To succeed, banks have to prioritize maintaining and strengthening customer trust by being transparent about data use. They should implement strong privacy protections, something that might be much harder for tech companies to do.

CX and AI

One of the main reasons big tech plays such a significant role in our lives as consumers is the sector’s superior understanding of customer experience (CX). Research shows that the younger the customer is, the higher their customer experience expectations are.

CX is of critical importance and goes far beyond offering an app that provides insight and lets you transfer money. Within a digital banking environment, there is the possibility to understand each customer profile and incorporate best practices on personal finance most fittingly.

We also should not underestimate the impact of AI in the coming years. From the way interfaces operate and how we interact with brands to personalization on an unprecedented scale, banks will need to embrace AI – even though this may be extremely complex in an industry where strict regulations take precedence. Consumers, however, won’t care about these challenges, nor will the competition.

Prioritizing customer-centricity is essential for the future of banks if they wish to continue to foster loyalty, attract new customers, and position themselves as trusted financial partners in a rapidly evolving landscape.

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