Banks are facing challenges in several areas, but there are four that stand out in today’s customer-focused market.
The top 4 challenges facing the banking industry and financial institutions
- Not making enough money Despite all of the headlines about banking profitability, banks and financial institutions still are not making enough return on investment, or the return on equity, that shareholders require.
- Consumer expectationsThese days it’s all about the customer experience, and many banks are feeling pressure because they are not delivering the level of service that consumers are demanding, especially in regards to technology. As mobile phone usage soars and younger consumers expect simplification, the banking and finance industry need to adapt.
Services like Venmo, Apply Pay, and Google Wallet have made it a customer expectation that banking services – from bill pay to deposits to purchases – can be completed on mobile phones, and financial institutions must offer simplified banking services to compete.
- Increasing competition from financial technology companiesFinancial technology (FinTech) companies are usually start-up companies based on using software to provide financial services. The increasing popularity of FinTech companies is disrupting the way traditional banking has been done. This creates a big challenge for traditional banks because they are not able to adjust quickly to the changes – not just in technology, but also in operations, culture, and other facets of the industry.
- Regulatory pressureRegulatory requirements continue to increase, and banks need to spend a large part of their discretionary budget on being compliant, and on building systems and processes to keep up with the escalating requirements.
These challenges continue to escalate, so traditional banks need to constantly evaluate and improve their operations in order to keep up with the fast pace of change in the banking and financial industry today.
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This post was republished with permission from The Digitalist.