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How Fintech Innovation Transforms the Banking Sector

Trusted banking relationships are important to both customers and financial services organizations. Traditionally, a banking relationship was a longstanding one, that could potentially last a customer’s lifetime. Today, that now seems like a bygone era.

The introduction of online and mobile banking solutions has fundamentally altered the traditional relationships in the banking area, enabling disruption to the legacy financial services business model.

Measures to increase competition and make switching accounts easier have reduced friction, while strong commoditization of services in the U.S. market has led to decreases in profit margins.

Digital Banking Market Development

The total number of digital banking users will exceed 3.6 billion by 2024 -- that's up from 2.4 billion in 2020 and a 54 percent increase, according to the latest worldwide market study by Juniper Research.

This growth will be driven by the rise of digital-only banks, fintech innovations, and the ongoing focus on digital transformation by established consumer and commercial bank brands.

The new research study found that digital-only banks have gained market share from traditional banks by offering superior user experiences and tightly focused unique selling propositions (USPs).


The research recommends that established banks must personalize the software app experience; using artificial intelligence (AI) based personal financial management tools to effectively compete against digital-only bank innovation.

Financial services firms invested heavily in digital transformation and new product offerings in 2019, although the extent of these market development activities varied considerably.

Juniper's 'Digital Transformation in Banking Readiness Index' analyzed leading Tier-1 banks to evaluate their digital transformation readiness and highlight their respective positioning in their digital innovation roadmaps.

Juniper analysts identified the top three leading group of banks for digital transformation, as follows: Bank of America, BBVA and JPMorgan Chase.

Bank of America offers extensive digital solutions, including the Erica chatbot, and has had noticeable adoption in digital usage and engagement.

BBVA has focused on capitalizing on APIs in banking, by offering the BBVA Open Platform, which is a Banking-as-a-Service platform.

JPMorgan Chase has experimented with blockchain technology and is rumored to be planning a digital-only service launch in the UK.

Outlook for Digital Banking Innovation Growth

"These banks have executed highly effective digital transitions; however digital transformation is never complete. These banks must now refocus on the new strategies required to retain their digital leadership," said Nick Maynard, lead analyst at Juniper Research.

The research also noted that traditional banks are launching digital-only brands, such as Bó from UK bank NatWest. However, Juniper analyst has cautioned that these product launches must be differentiated from existing offerings and digital-only competition -- providing a more personalized experience -- or they will fail to gain momentum.

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