# What’s in store for banking in 2021?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-12-30
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: Banking Industry Transformation 2021
Meta Description: Explore the transformative changes in the banking industry in 2021, accelerated by the pandemic. Discover how tech and trust will shape the future.
URL: https://financedigest.com/whats-in-store-for-banking-in-2021html

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_By **Laura Crozier,** Global Director of Industry Solutions, Financial Services at Software AG_

Looking ahead to what is in store for the banking industry would be impossible without taking the pandemic’s transformational changes into account. Covid-19 has accelerated trends which were already underway in most industries, and banking is no exception. While the [industry has been transforming for years](https://www.financedigest.com/signal-transformer-market-one-the-most-booming-industry-in-upcoming-years-due-to-global-demand-in-industry-by-2027.html "Signal Transformer Market| One the Most Booming Industry in Upcoming Years Due to Global Demand in Industry by 2027"), progress has been piecemeal as a result of regulatory complications, data protection considerations and a reluctance to change old ways.

The crisis has presented [banks](https://www.financedigest.com/swiss-national-bank-raises-rates-says-bank-crisis-stopped.html "Swiss National Bank raises rates, says bank crisis stopped") with a golden opportunity to regain the trust lost in the last financial crisis. Here, [banks have had the chance to be the “good guys” by supporting their customers](https://www.financedigest.com/how-close-can-banks-get-to-their-customers.html "How close can banks get to their customers?") throughout the current turmoil. Research from [Modularbank](https://www.verdict.co.uk/bo-digital-bank-rbs-natwest/) cites tech as a key factor for UK consumers when choosing a bank.

This year saw [digital transformation](https://www.financedigest.com/can-ai-supercharge-your-banks-digital-transformation-strategy.html "Can AI supercharge your bank’s digital transformation strategy?") finally start producing results, bringing tangible improvements to their customers. Expect to see this transformation continue further in 2021:

**Banks will regain** [consumer trust](https://www.financedigest.com/more-than-twice-as-many-consumers-trust-customer-reviews-over-companies-themselves-according-to-research-from-smart-money-people.html "More than twice as many consumers trust customer reviews over companies themselves according to research from Smart Money People")

Banks across the globe pulled out the stops to integrate and adapt [systems and processes](https://www.financedigest.com/global-tissue-processing-system-market-report.html "Global Tissue Processing System Market Report") to help customers during the pandemic. They offered accommodations in loans, assisted governments with the [distribution of financial relief,](https://www.businessinsider.com/countries-offering-direct-payments-or-basic-income-in-corona-crisis-2020-4#germany-is-offering-aid-to-small-employers-and-to-freelancers-and-freelancers-in-berlin-can-get-over-5000-in-assistance-2) and supported consumers by upping contactless spending limits and virtual deposits.

In 2021, [banks will risk losing that rosy glow as economic circumstances drive them to deal with non-performing loans](https://www.financedigest.com/ant-group-starts-to-differentiate-consumer-loan-business-jiebei-from-bank-loans.html "Ant Group starts to differentiate consumer loan business Jiebei from bank loans"), mortgage foreclosures, layoffs etc. But, beyond their role in society as providers of capital and liquidity, [banks will invest](https://www.financedigest.com/investment-banks-trading-revenue-likely-to-shrink-barclays-boss-says.html "Investment banks’ trading revenue likely to shrink, Barclays boss says") to sustain their reputations as trusted and good corporate citizens and use their power to persuade their customers and providers to adopt higher environmental and ethical standards. This will be in the areas of bank carbon-neutrality, sustainable financing, serving the unbanked, diversity and gender equality (as the number of women running a major global bank will double from one ( [Jane Fraser at Citi](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjwzM3qgbztAhWFzVkKHWiPDIoQFjATegQIKBAC&url=https%3A%2F%2Ffortune.com%2Flongform%2Fciti-ceo-jane-fraser-first-woman-wall-street-bank-citigroup-glass-ceiling%2F&usg=AOvVaw2EOmRveF6HFhDTTBg24Rav)) to two). It’s a start.

**Getting used to new ways of working**

Back in Q1, when bank employees cranked up their laptops on their dining room tables, banks that were strategically undertaking [business transformation](https://www.financedigest.com/the-modern-cfo-at-the-forefront-of-business-transformation.html "The Modern CFO: At the forefront of business transformation") accelerated their efforts. Those that were tactical, or on the fence, now understand with painful clarity that this [work must](https://www.financedigest.com/why-employers-rocked-by-the-great-resignation-must-keep-working-mothers-on-board.html "Why employers rocked by the Great Resignation must keep working mothers on board ") be undertaken strategically.

[Cracks in process and the way](https://www.financedigest.com/five-ways-bad-bots-are-trying-to-crack-your-virtual-vaults-by-erez-hasson-strategist-application-security-at-imperva.html "Five Ways Bad Bots Are Trying To Crack Your Virtual Vaults") of working and their resulting risks can be crippling. Especially from a back-office perspective, it is not enough to rely on “organisational memory” and collegial proximity for work to get done right. Advanced banks pushed the boundaries of [remote work](https://www.financedigest.com/helping-employees-recover-from-remote-workings-mental-health-implications.html "Helping employees recover from remote working’s mental health implications"), and the proof of concept was successful. So, they’re doubling down on developing digital twins and [moving to the cloud](https://www.financedigest.com/becoming-agile-starts-by-moving-to-the-cloud.html "Becoming agile starts by moving to the cloud"). They’re adopting the [hybrid office/WFH approach](https://www.fnlondon.com/articles/three-quarters-of-investment-banks-plan-to-keep-staff-home-permanently-20201111) to reduce health risks and reduce cost permanently. The watercooler will never be the same.

**Cash on its way out**

Ok, maybe the rumours of the death of cash are a bit exaggerated since there will always be the [need](https://www.financedigest.com/british-pensions-step-up-multi-billion-pound-asset-fire-sale-as-need-for-cash-soars.html "British pensions step up multi-billion-pound asset fire sale as need for cash soars") for cash (and, to some extent checks; the USA, for example, cannot seem to live without them). But the pandemic has permanently changed the way that consumers and small businesses bank, and the demotion of cash has been accelerated by a [decade](https://www.verdict.co.uk/starling-ceo-cashless/) by the pandemic. For example, the [Norwegian central bank](https://www.finextra.com/newsarticle/36905/cash-payments-plummet-to-just-four-percent-of-transactions-in-norway) said that cash payments in that country have plummeted to just 4% of transactions since March.

Implications? It will be [critical to continue](https://www.finextra.com/newsarticle/37100/payments-have-become-tech-arms-race-say-banks) evolving payments to be smart, safe and flexible to compete in new world, in both retail and commercial banking. Also, the permanent change in the mix of channels will [see banks’ face-to-face engagement with customers](https://www.financedigest.com/britains-metro-bank-returned-to-profit-in-september-sees-no-customer-stress.html "Britain’s Metro Bank returned to profit in September, sees no customer stress") fade. Branches aren’t going to go away entirely, but they will be reserved for high [value activities](https://www.financedigest.com/how-process-automation-increases-productivity-in-the-insurance-sector-while-giving-employees-room-for-more-high-value-activity.html "How Process Automation increases productivity in the insurance sector while giving employees room for more high value activity") – by appointment only. To compensate, the [personal touch has to be delivered digitally](https://www.financedigest.com/personalized-digitization-to-drive-the-antiseptic-bathing-market.html "Personalized digitization to drive the Antiseptic Bathing Market") and intelligently.

As we head into the new year, banks will embrace their role as [personal](https://www.financedigest.com/cracking-the-personal-finance-code.html "Cracking the Personal Finance Code") financial advisors. To this end, they will provide tailored [services unique to each customer’s](https://www.financedigest.com/any-business-can-now-offer-their-customers-financial-services-how-embedded-finance-is-reinventing-the-wheel-when-it-comes-to-banking.html "Any business can now offer their customers financial services: How embedded finance is reinventing the wheel when it comes to banking") financial situation, while also consulting around products and services which extend beyond the traditional banking ecosystem. [Consumer data](https://www.financedigest.com/power-to-the-people-how-consumers-are-calling-the-shots-when-it-comes-to-data-privacy.html "Power to the people: how consumers are calling the shots when it comes to data privacy") will ultimately play a pivotal role in making this a reality, and will help to build stronger relationships as we emerge from the current crisis. That said, the drive to digital will also lead to a greater appreciation for the value of data among customers, who will be more [careful about who they share](https://www.financedigest.com/listen-care-share-ofwats-latest-report-on-the-water-industrys-handling-of-customers-during-the-pandemic.html "Listen, Care, Share: Ofwat’s latest report on the water industry’s handling of customers during the pandemic") their data with and for what purposes.


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