8 Ways Digital Banking Will Evolve Over the Next 5 Years

One of the things we learned over the past year is that you can accelerate anything. The and industries compressed roughly a decade of ecommerce innovation into a 10-month span. Unsurprisingly, people have adapted. Consumer expectations have shifted, and companies have pivoted accordingly.

This change has been represented in the finance sector by customers embracing digital services, including many who previously had never completed financial transactions online. Currently, millions are banking without walking into a physical location, and that trend is unlikely to change. It’s often quoted that necessity is the mother of invention. In many ways, this has proved necessity is also the mother of adoption.

Now, entrepreneurs, business leaders and industry executives face an unprecedented and unexpected rate of change. Advancements that were estimated to be years out may now emerge as the “new normal” within months. The future of banking will not only look different in regard to more rapid digital adoption, but also in terms of service offerings, who offers them and the relationships institutions have with one another and their customers.

Soon, the most successful banks will rely less on traditional services and revenue streams. They’ll depend more on the ability to see customers’ financial needs from end-to-end and to meet those needs in a connected, seamless and frictionless way.

The following eight factors will significantly inform digital banking through 2025.

The relevance of brick-and-mortar banks will continue to fade, slowly but steadily, giving way to the overwhelming use of digital services via mobile, computer and other devices. While physical banks are unlikely to disappear entirely in the decade ahead, many of those remaining will have to repurpose to serve niche needs as general financial services are increasingly available online.

For consumers, it’s beneficial to maintain access to a variety of payment options, but those options will include cashless. Not only are electronic transactions generally more convenient and efficient for individuals, but digital financial ecosystems also deliver significant advantages to businesses, governments and economies at large. The question is not whether companies and countries will go cashless — rather, it’s who will lead the charge or dig in their heels.

A century ago, it would have been nearly impossible to convince someone their entire liquid value would one day be available for viewing and transactions would be completed via a small plastic card. Today, you might encounter similar difficulty in convincing some that cards will soon be obsolete, too. Asian markets lead this trend, where more than 50% of transactions are made using digital wallets. The massive growth in payment-capable IoT devices and accompanying services are the primary drivers of this trend.

Despite ongoing debate between lawmakers, regulators, and executives, SaaS companies like PayPal, Stripe and Venmo aren’t considered banks. Increasingly, however, they will serve customers’ financial needs in the same way traditional banks do today. The rise of super-apps like China’s WeChat, Singapore’s Grab, and Indonesia’s Gojek will also continue to disrupt the financial world.