Article | In the Financial industry, what recent development do you believe will grow the most in the next 10 years?

Article | In the Financial industry, what recent development do you believe will grow the most in the next 10 years?
8th March 2016 Atheneum Team

Ten years from now, the financial services sector will be transformed to host an array of new providers and innovative services. The main shift will be in expectations and behavior of consumers; resulting in the true evolution of finance.

Evolution of the Financial Institutions industry will be driven by Technology, Compliance & Financial Inclusion. While the trends in the next decade will be broad, the entire Financial Institutions industry will witness disruption, putting pressure to innovate and to address customer needs in a broader fashion.

Emerging Trends in Banking Sectors:

Payments and settlement systems will need to adapt as alternative innovative payment systems. Crypto currencies could make the future of value transfer & settlement systems more global, transparent, faster and cheaper. The traditional fixed deposits mechanism could see a shift towards Peer-to-peer lending which offers higher returns to the consumer on the deposits. Funds raising from Banks & PE companies would face competition from crowd funding platforms as they are gaining strength offering win-win scenarios.

Advisory services of private wealth management services & financial institutions could face challenges to sustain their traditional approach of distributing wealth products since customers would like to have customized offerings. With the emergence of big data and computer technology, companies would prefer to use ‘intelligent computers’ due to higher efficiency and minimal chances of error.

Share trading on stock exchange using a banking platform may become outdated as concerned parties would prefer to deal directly and avoid intermediaries playing negligible role due to technological advancements and optimized financial management.

Mobilution (Evolution of Financial services to Mobile, Wearable devices, Internet of Things):

Customer expectations from Financial Service companies are evolving and now more than half of consumer bank interactions around the world take place through online or mobile channels, if we include ATMs digital interactions it exceeds 85% today and with the emergence of wearable devices, it could hit 95% ~ 99% over the next decade.

With increased cost pressures and a growing demand for flexibility, accessibility and personalization, financial services organizations will accelerate their use of technology to meet customer needs.

Growth in Banking sector’s especially in emerging markets like India, China will come from young customers, who trust technology more so Big data Analytics, Artificial intelligence and predictive data have a great role to play.

In addition to growing access of banking services on mobile, the Internet of Things will facilitate the growth and transformation in the banking space which will help improve online and in-person security. ‘Consumerization’ would be required by banks to connect with customers on social media and revolutionary product development.

Customer Relationships would be Glocal (Global Local):

Data Driven information about customers will add substantial value to Customer Relationship Management (CRM). Moving to another service provider / vendor would be much easier than before as Technology will make brand switch more flexible.

Technology has not only played a vital role in this transformation but also has been an enabler for Operational efficiency and risk management. Start-ups that are reinventing ways to serve customers’ financial needs will continue to thrive.

Over the next decade, the financial service industry will shift its focus from transactions to customized value-added services. Customers will rely on technology solutions via smartphones for transaction relationships.

Cloud computing platforms and applications will combine with advanced analytical tools, ever-larger data sets, social and mobile computing to reshape the way the financial services industry designs and delivers value-added products and services to customers.

Increasing Importance of Compliance:

Compliance will be the cornerstone of the business growth due to stricter regulatory requirements. Regulatory pressures drives Business Model Changes.

Government supervision of the financial services industry is changing significantly. New regulatory measures will attempt to reduce the risk of future financial crises and increase consumer protection. Stronger regulation will significantly change financial institution management and reporting, leading to higher costs.

New consumer protection laws will limit banking fees and increase their transparency, reducing revenue and margins for many financial products and services. To compensate for the loss of regulated revenue, financial institutions will need to reduce cross-product and services subsidies, eliminate some free services to ensure profitability across all customer segments.

Creation of new Millennials Segments:

Millennials will play a vital role in next decade. The rise of the millennial created a new demographic whose expectations are very different. Millennials will soon command the largest wallet power as well. It’s estimated they will be spending $200 billion annually by 2017 and $10 trillion over their lifetimes as consumers in the U.S. alone. In the USA, 18% of millennials have switched their primary bank within the past 12 months—compared to 10 percent of customers aged 35 to 54 and just 3% of people 55 and older. The growth of FinTech has been driven by adoption across age groups but the demand from the millennial generation to innovate and think about financial services differently has been a catalyst for change.

Payments, Remittances & Financial Inclusion:

Innovations will make payments simpler and Non-traditional payments schemes will play a key role. New consumer functionalities which are built on existing payment systems that will both drive and enable meaningful changes in customer behavior.

Mobile commerce is not only dramatically increasing the use of electronic banking and commerce, they are transforming it. Debit and Credit card usage will decline in the years ahead, while mobile payments, integrated billing and automated payments would take their place.


The landscape of the financial services industry will be totally different over the next decade. In order for players to survive, they have to keep innovating and develop out-of-box solutions to stay ahead.

Increased regulatory pressures and competition from new and existing competitors will change the industry playing field. Technology will drive innovation and create new efficiencies and ways to interact with customers and business models. Demographic shifts and the growth of start-ups / SMEs will create opportunities for financial institutions to develop strong bonds with customers.

Customers’ expectations for seamless delivery and quality will increase across all customer connection points. Over the coming decade, customers will be more diverse and demand more insights, transparency and information.

Life in the next decade will become increasingly complex and financial institutions which can help customers manage their lives, finances, health and lifestyle planning will have more sustainability and profitable opportunity.