Article | Rapid change is here: The future of financial services
While spared the massive waves of layoffs that hit the restaurant, hospitality and entertainment industries, employees in the financial services sector faced stress-related organisational uncertainty, market volatility, social isolation and constricted childcare options. The nature of the sector’s work enabled most organisations to quickly shift to remote working arrangements after lockdowns began.
17818
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Recovery, Resilience and the Road Ahead: Rethinking US Workplace Priorities...
Waves of substantial disruption are the norm in business, not the exception. The challenges of 2020-21 have been unusual, but workers and organisations can never assume that stability will persist. The US employment landscape was already seeing substantial transformation long before 2020. That said, covid-19 has revealed the future of work faster than anyone expected. Digitalisation has accelerated; widespread working from home has left many workers eager for more; and the joint experience of navigating through immense disruption has profoundly affected workplace relations. The great unknown is how much will last and how much will be seen in retrospect as a temporary blip.
To shed light on the major shifts taking place, The Economist Intelligence Unit, sponsored by Prudential, conducted an in-depth survey in November and December 2020 of over 5,800 US workers and executives across five key industry verticals—healthcare, financial services, manufacturing, the public sector and unions—in order to explore the impact of the pandemic accelerated new work paradigm. Specifically, we asked about organisational and worker concerns, priorities, remote work experiences, digital maturity, technology investments, skills and capabilities, and likely future challenges. This executive summary reports the overall findings from the survey, while other pieces will discuss insights relevant to the specific industry verticals.
Key findings:
Workers and their organisations were largely on the same page as they addressed the workplace implications of dealing with covid-19-related disruption in 2020. The economic turmoil that the pandemic unleashed had uneven results with, perhaps surprisingly, more workers saying that their company culture and workplace relations improved rather than deteriorated. Although workers are currently optimistic about their employment, there are widespread concerns about longer-term financial security. Talent largely values better pay and job security, but organisations may be prioritising other factors and some risk focusing insufficiently on worker engagement. Digitalisation will continue to reshape the workplace but also intensify the competition for digital talent. A lasting legacy of the social response to the pandemic will be retaining remote working as a mainstream option.
![new work paradigm](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/untitled_design.png?itok=hQPTb4yW)
A strategic playbook for navigating the pandemic-accelerated new work parad...
The covid-19 pandemic has reshaped the US employment landscape in drastic and long lasting ways. A variety of pre-existing trends affecting organisations and workers have been accelerated by the historic crisis: digital transformation, remote work and automation, to name a few. The new normal that emerges from the pandemic has profound implications for how and where work gets done, and—more fundamentally—how organisations and workers relate to each other. To remain competitive, organisations will need to skillfully navigate both near-term business challenges and longer-term talent, technology and workplace culture issues.
To understand how the pandemic has affected workers and organisations, and surface important sector-specific and broader trends, Economist Impact, sponsored by Prudential, surveyed more than 5,800 US workers and executives in late 2020. Respondents were in five key industry verticals: healthcare, financial services, manufacturing, the public sector and unions. Complementing the Recovery, Resilience and the Road Ahead report, which summarises the overall findings from the survey, this playbook presents key findings for specific industry verticals, insights gleaned from expert interviews, and discusses their implications for organisations moving forward. While revealing cross-vertical trends, it sheds light on unique or prominent findings in specific verticals.
Key Findings:
Overall, many workers said their wellbeing had improved in various ways during the pandemic. However, the survey has revealed its disproportionate impact on certain groups, including older workers and women. These disparities, particularly seen in the healthcare and public sector verticals, with high levels of their workforce deemed essential to critical social and physical infrastructure, incites a deeper observation. Covid-19 has been a multidimensional public health and economic crisis. Health and safety concerns have been significant among essential workers, but the survey results make clear that financial concerns remained prominent. In that vein we have observed verticals—across the board—fall short of providing or raising awareness of tools and resources to address this need. While digital transformation has become an urgent requirement during the pandemic, rather than a business goal for organisations, executives are increasing investments in new technologies, as well as grappling with disproportionate digital divides, evident in the public sector and manufacturing. Competition for information technology talent will also intensify, especially in the financial services sector. The unpredictable disruptions presented by covid-19 have underscored the importance of stability for workers on edge and exhausted. For some, the crisis has highlighted how unions empower members to advocate for their wellbeing and safety, exemplified by the investments seen in the public sector. Accordingly, there may be a lesson there for organisations across all sectors as they emerge, transformed in a number of ways, from the pandemic: an empowered workforce can also be more engaged and resilient.
![Global wealth: Future-proofing prosperity Global wealth: Future-proofing prosperity](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_images_2.png?itok=ryab_8yt)
The shifting landscape of global wealth: Future-proofing prosperity in a ti...
In some instances the impact of this shift will be shaped by local factors, such as demographic changes. In other instances this shift will reflect shared characteristics, as demonstrated by the greater popularity of overseas investing among younger high-net-worth individuals (HNWIs) brought up in an era of globalisation. Whatever the drivers, the landscape of wealth is changing—from local to global, and from one focused on returns to one founded on personal values.
Despite rising economic concerns and a tradition of investor home bias in large parts of the world, the new landscape of wealth appears less interested in borders. According to a survey commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit (EIU), younger HNWIs are substantially more enthusiastic about foreign investing. The U.S. is a particularly high-profile example of a country where a long-standing preference for investments in local markets appears set to be transformed.
Click the thumbnail below to download the global executive summary.
Read additional articles from The EIU with detail on the shifting landscape of global wealth in Asia, Canada, the U.S. and UK on RBC's website.
Related content
![US Workplace Priorities](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/untitled_design.png?itok=hQPTb4yW)
Recovery, Resilience and the Road Ahead: Rethinking US Workplace Priorities...
Waves of substantial disruption are the norm in business, not the exception. The challenges of 2020-21 have been unusual, but workers and organisations can never assume that stability will persist. The US employment landscape was already seeing substantial transformation long before 2020. That said, covid-19 has revealed the future of work faster than anyone expected. Digitalisation has accelerated; widespread working from home has left many workers eager for more; and the joint experience of navigating through immense disruption has profoundly affected workplace relations. The great unknown is how much will last and how much will be seen in retrospect as a temporary blip.
To shed light on the major shifts taking place, The Economist Intelligence Unit, sponsored by Prudential, conducted an in-depth survey in November and December 2020 of over 5,800 US workers and executives across five key industry verticals—healthcare, financial services, manufacturing, the public sector and unions—in order to explore the impact of the pandemic accelerated new work paradigm. Specifically, we asked about organisational and worker concerns, priorities, remote work experiences, digital maturity, technology investments, skills and capabilities, and likely future challenges. This executive summary reports the overall findings from the survey, while other pieces will discuss insights relevant to the specific industry verticals.
Key findings:
Workers and their organisations were largely on the same page as they addressed the workplace implications of dealing with covid-19-related disruption in 2020. The economic turmoil that the pandemic unleashed had uneven results with, perhaps surprisingly, more workers saying that their company culture and workplace relations improved rather than deteriorated. Although workers are currently optimistic about their employment, there are widespread concerns about longer-term financial security. Talent largely values better pay and job security, but organisations may be prioritising other factors and some risk focusing insufficiently on worker engagement. Digitalisation will continue to reshape the workplace but also intensify the competition for digital talent. A lasting legacy of the social response to the pandemic will be retaining remote working as a mainstream option.
![new work paradigm](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/untitled_design.png?itok=hQPTb4yW)
A strategic playbook for navigating the pandemic-accelerated new work parad...
The covid-19 pandemic has reshaped the US employment landscape in drastic and long lasting ways. A variety of pre-existing trends affecting organisations and workers have been accelerated by the historic crisis: digital transformation, remote work and automation, to name a few. The new normal that emerges from the pandemic has profound implications for how and where work gets done, and—more fundamentally—how organisations and workers relate to each other. To remain competitive, organisations will need to skillfully navigate both near-term business challenges and longer-term talent, technology and workplace culture issues.
To understand how the pandemic has affected workers and organisations, and surface important sector-specific and broader trends, Economist Impact, sponsored by Prudential, surveyed more than 5,800 US workers and executives in late 2020. Respondents were in five key industry verticals: healthcare, financial services, manufacturing, the public sector and unions. Complementing the Recovery, Resilience and the Road Ahead report, which summarises the overall findings from the survey, this playbook presents key findings for specific industry verticals, insights gleaned from expert interviews, and discusses their implications for organisations moving forward. While revealing cross-vertical trends, it sheds light on unique or prominent findings in specific verticals.
Key Findings:
Overall, many workers said their wellbeing had improved in various ways during the pandemic. However, the survey has revealed its disproportionate impact on certain groups, including older workers and women. These disparities, particularly seen in the healthcare and public sector verticals, with high levels of their workforce deemed essential to critical social and physical infrastructure, incites a deeper observation. Covid-19 has been a multidimensional public health and economic crisis. Health and safety concerns have been significant among essential workers, but the survey results make clear that financial concerns remained prominent. In that vein we have observed verticals—across the board—fall short of providing or raising awareness of tools and resources to address this need. While digital transformation has become an urgent requirement during the pandemic, rather than a business goal for organisations, executives are increasing investments in new technologies, as well as grappling with disproportionate digital divides, evident in the public sector and manufacturing. Competition for information technology talent will also intensify, especially in the financial services sector. The unpredictable disruptions presented by covid-19 have underscored the importance of stability for workers on edge and exhausted. For some, the crisis has highlighted how unions empower members to advocate for their wellbeing and safety, exemplified by the investments seen in the public sector. Accordingly, there may be a lesson there for organisations across all sectors as they emerge, transformed in a number of ways, from the pandemic: an empowered workforce can also be more engaged and resilient.
![Global wealth: Future-proofing prosperity Global wealth: Future-proofing prosperity](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_images_2.png?itok=ryab_8yt)
The shifting landscape of global wealth: Future-proofing prosperity in a ti...
In some instances the impact of this shift will be shaped by local factors, such as demographic changes. In other instances this shift will reflect shared characteristics, as demonstrated by the greater popularity of overseas investing among younger high-net-worth individuals (HNWIs) brought up in an era of globalisation. Whatever the drivers, the landscape of wealth is changing—from local to global, and from one focused on returns to one founded on personal values.
Despite rising economic concerns and a tradition of investor home bias in large parts of the world, the new landscape of wealth appears less interested in borders. According to a survey commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit (EIU), younger HNWIs are substantially more enthusiastic about foreign investing. The U.S. is a particularly high-profile example of a country where a long-standing preference for investments in local markets appears set to be transformed.
Click the thumbnail below to download the global executive summary.
Read additional articles from The EIU with detail on the shifting landscape of global wealth in Asia, Canada, the U.S. and UK on RBC's website.
VIDEO | Recovery, Resilience and the Road Ahead - Financial Services
This video is part of the Recovery, Resilience and the Road Ahead programme conducted by Economist Impact and sponsored by Prudential. The program explores the impact of the pandemic-accelerated new work paradigm across five key industry verticals, including financial services.
Related content
![US Workplace Priorities](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/untitled_design.png?itok=hQPTb4yW)
Recovery, Resilience and the Road Ahead: Rethinking US Workplace Priorities...
Waves of substantial disruption are the norm in business, not the exception. The challenges of 2020-21 have been unusual, but workers and organisations can never assume that stability will persist. The US employment landscape was already seeing substantial transformation long before 2020. That said, covid-19 has revealed the future of work faster than anyone expected. Digitalisation has accelerated; widespread working from home has left many workers eager for more; and the joint experience of navigating through immense disruption has profoundly affected workplace relations. The great unknown is how much will last and how much will be seen in retrospect as a temporary blip.
To shed light on the major shifts taking place, The Economist Intelligence Unit, sponsored by Prudential, conducted an in-depth survey in November and December 2020 of over 5,800 US workers and executives across five key industry verticals—healthcare, financial services, manufacturing, the public sector and unions—in order to explore the impact of the pandemic accelerated new work paradigm. Specifically, we asked about organisational and worker concerns, priorities, remote work experiences, digital maturity, technology investments, skills and capabilities, and likely future challenges. This executive summary reports the overall findings from the survey, while other pieces will discuss insights relevant to the specific industry verticals.
Key findings:
Workers and their organisations were largely on the same page as they addressed the workplace implications of dealing with covid-19-related disruption in 2020. The economic turmoil that the pandemic unleashed had uneven results with, perhaps surprisingly, more workers saying that their company culture and workplace relations improved rather than deteriorated. Although workers are currently optimistic about their employment, there are widespread concerns about longer-term financial security. Talent largely values better pay and job security, but organisations may be prioritising other factors and some risk focusing insufficiently on worker engagement. Digitalisation will continue to reshape the workplace but also intensify the competition for digital talent. A lasting legacy of the social response to the pandemic will be retaining remote working as a mainstream option.
![new work paradigm](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/untitled_design.png?itok=hQPTb4yW)
A strategic playbook for navigating the pandemic-accelerated new work parad...
The covid-19 pandemic has reshaped the US employment landscape in drastic and long lasting ways. A variety of pre-existing trends affecting organisations and workers have been accelerated by the historic crisis: digital transformation, remote work and automation, to name a few. The new normal that emerges from the pandemic has profound implications for how and where work gets done, and—more fundamentally—how organisations and workers relate to each other. To remain competitive, organisations will need to skillfully navigate both near-term business challenges and longer-term talent, technology and workplace culture issues.
To understand how the pandemic has affected workers and organisations, and surface important sector-specific and broader trends, Economist Impact, sponsored by Prudential, surveyed more than 5,800 US workers and executives in late 2020. Respondents were in five key industry verticals: healthcare, financial services, manufacturing, the public sector and unions. Complementing the Recovery, Resilience and the Road Ahead report, which summarises the overall findings from the survey, this playbook presents key findings for specific industry verticals, insights gleaned from expert interviews, and discusses their implications for organisations moving forward. While revealing cross-vertical trends, it sheds light on unique or prominent findings in specific verticals.
Key Findings:
Overall, many workers said their wellbeing had improved in various ways during the pandemic. However, the survey has revealed its disproportionate impact on certain groups, including older workers and women. These disparities, particularly seen in the healthcare and public sector verticals, with high levels of their workforce deemed essential to critical social and physical infrastructure, incites a deeper observation. Covid-19 has been a multidimensional public health and economic crisis. Health and safety concerns have been significant among essential workers, but the survey results make clear that financial concerns remained prominent. In that vein we have observed verticals—across the board—fall short of providing or raising awareness of tools and resources to address this need. While digital transformation has become an urgent requirement during the pandemic, rather than a business goal for organisations, executives are increasing investments in new technologies, as well as grappling with disproportionate digital divides, evident in the public sector and manufacturing. Competition for information technology talent will also intensify, especially in the financial services sector. The unpredictable disruptions presented by covid-19 have underscored the importance of stability for workers on edge and exhausted. For some, the crisis has highlighted how unions empower members to advocate for their wellbeing and safety, exemplified by the investments seen in the public sector. Accordingly, there may be a lesson there for organisations across all sectors as they emerge, transformed in a number of ways, from the pandemic: an empowered workforce can also be more engaged and resilient.
![Global wealth: Future-proofing prosperity Global wealth: Future-proofing prosperity](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_images_2.png?itok=ryab_8yt)
The shifting landscape of global wealth: Future-proofing prosperity in a ti...
In some instances the impact of this shift will be shaped by local factors, such as demographic changes. In other instances this shift will reflect shared characteristics, as demonstrated by the greater popularity of overseas investing among younger high-net-worth individuals (HNWIs) brought up in an era of globalisation. Whatever the drivers, the landscape of wealth is changing—from local to global, and from one focused on returns to one founded on personal values.
Despite rising economic concerns and a tradition of investor home bias in large parts of the world, the new landscape of wealth appears less interested in borders. According to a survey commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit (EIU), younger HNWIs are substantially more enthusiastic about foreign investing. The U.S. is a particularly high-profile example of a country where a long-standing preference for investments in local markets appears set to be transformed.
Click the thumbnail below to download the global executive summary.
Read additional articles from The EIU with detail on the shifting landscape of global wealth in Asia, Canada, the U.S. and UK on RBC's website.
Capturing value in the cloud
- Just under three-quarters (72%) of IT executives at banks surveyed by The Economist Intelligence Unit report that incorporating the cloud into their organisation’s products and services will help them to achieve their business priorities.
- Business agility, elasticity and scalability are together cited by 40% of respondents as top drivers of cloud adoption.
17798
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![Demanding More](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/temenos_article_2_perspectives_header_1-min.jpg?itok=q-J0ulBE)
Demanding More
More than a year after much of the world went into some form of lockdown, many customers previously resistant to digital banking have grown accustomed to it, and most do not plan to return to their old banking habits. A survey of people in the US aged 18 to 65, conducted by Chase Bank, found that four in five now prefer to manage their finances digitally rather than in person, and three-quarters are likely to continue using digital payment options even after the covid-19 threat subsides. These findings are mirrored in many other countries around the world.
“Overnight people became digital, when it was supposed to take ten years,” says Michal Kissos Hertzog, chief executive of Pepper, an Israeli digital bank, of the impact of the covid-19 pandemic. “It doesn’t matter if you are Gen X or Gen Z—everyone became digital.”
Banks have been forced to adapt as a result. “All banks have had to up their game, so competition has become stronger,” says Ms Kissos Hertzog. The shift to online brought by the pandemic has proven a boon for digital-only banks. As of January 2021, 14m Brits (27% of UK adults) had a digital-only bank account—16% growth from January 2020 and a threefold increase compared to January 2019.
The shift has brought forward expectations of the demise of the branch, traditionally the centre of the retail banking experience. According to our annual global banking survey, supported by Temenos, 65% of bankers now believe that the traditional branch-based banking model will be “dead” within five years, while 71% expect cash to represent less than 5% of all retail transactions globally by 2025.
Senior executives report that technology is driving customer experience. Survey respondents cited changing customer behaviours and demands around digital banking, the new technologies needed to understand and serve customers better, and regulation on digital technology (including data protection, which dictates how banks can interact with customers and their data) as the top three trends that will have the biggest impact on banks in their countries by 2025.
Consequently, survey respondents’ top strategic priorities by 2025 are all customer-focused: improving customer experience and engagement, including personalisation and intimacy; mastering digital marketing; and migrating client usage from physical to digital channels.
At Pepper, the focus has been personalisation. When individual customers open the bank’s app, they see a homepage personalised to their specific actions, says Ms Kissos Hertzog. “Different customers will see different products, will receive different marketing.” The goal is a “segment of one”, tailoring the experience precisely to the individual consumer based on their activity and preferences. “The more personalised the service is, the more engaged customers are.”
Technology investment
According to survey respondents, banks’ top investments in customer-related technology include developing artificial intelligence (AI) platforms, such as digital advisors and voiceassisted engagement channels, and advanced and predictive data analytics for customer experience.
Adoption of this technology starts with data, says Ms Hertzog. “Banks are sitting on a humongous amount of data, but they are not doing a good job [of using it],” she says. “I want to use data to give customers a better understanding of their money, to help them decide how to save, to budget, whether they should invest in the stock market."
But she cautions against focusing investment on specific technologies just because they are the latest trend. “I’ve never heard my users saying, ‘I chose you because you have the best artificial intelligence of all banks’. What they care about is that they will have good service, that they’ll see the benefits from their bank, and that we meet their needs,” she says.
“When we speak about technology, it’s important to understand that the technology is not the target, it’s a means to an end. Of course, we have to have great AI, and we are implementing machine learning and blockchain—we’re doing all of that. But we are doing all of that in order to give the best customer experience.”
![Branching out: can banks move from city centres to digital ecosystems?](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/temenos_perspectives_header-min_1.jpg?itok=bhK1Cgzl)
Branching out: can banks move from city centres to digital ecosystems?
Crunch time for banks
Bankruptcy comes two ways, Ernest Hemingway wrote: “gradually, then suddenly”. Such has been high-street banking’s fate at the turn of the decade. Justifying the axing of a fifth of Santander’s branches, deputy chief executive Tony Prestedge told the BBC that branch transactions at the eurozone’s largest retail bank had fallen by a third in the two years prior to the covid-19 pandemic—before they plunged by half during the lockdowns of 2020. “The pandemic has ‘concertinaed’ five to ten years of change into a year,” said Mr Prestedge.
The rapid collapse of branch-based banking is an acceleration of a trend that The Economist Intelligence Unit’s global banking survey, now in its eighth year, has long seen coming. In the latest survey, conducted in early 2021, just under two-thirds (65%) of banking executives agreed that the branch-based model will be “dead” within five years, up from 59% last year and 35% in 2018 (see Figure 1). In 2018 69% of Europe-based respondents disagreed with the statement—today the same proportion agree.
This year’s survey finds that branch closures and continued pressure from non-traditional competitors have triggered a wholesale rethinking of banking priorities and business models among banking executives.
Just under two thirds (65%) of bankers now believe that the branch-based model will be “dead” within five years, up from 35% four years ago. The rise has been sharpest in Europe and North America.
Banks in 2021 face competition from all sides. New, nimbler competitors including fintech startups, payment players, superapp platforms and tech giants continue to gain market share from incumbent banks as more non-traditional players gain the ability to offer more traditional banking services. A number of youthful fintechs have landed banking charters in the past year, including Varo and Square, enabling them to take deposits and extend credit. The growth of capital markets and central banks’ tentative experiments in digital currency further threaten banks’ very raison d’être.
But banks are coming out fighting. The stumble of some consumer challenger banks over the course of the pandemic—firms such as Monzo and Revolut struggled with sharp falls in revenue and customer complaints over missing funds—has put smartphonefriendly, slick interfaces in sharp contrast with the dour reliability and brand recognition of established banks. Critically, customers appear to remain reluctant to trust digitallynative challengers with salary deposits. Many established banks, spurred by rapid consumer change forced by the pandemic, are hopeful that through strategic partnerships and investments in technology they can be the best of both for consumers: a trusted banking partner, and purveyors of whizzy, consumer-friendly banking experiences.
Customer experience: the currency of competition
This year’s survey reveals a dramatic shift in priorities. Five years ago, as banking costs soared due to new regulatory requirements worldwide, banks were focused on cutting costs and boosting margins to maintain shareholders’ return-on-equity. Today, customer experience and digital marketing are top priorities for executives as they strive to compete with challengers’ frictionless onboarding, budget planning and perks such as free international payments.
![Global wealth: Future-proofing prosperity Global wealth: Future-proofing prosperity](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_images_2.png?itok=ryab_8yt)
The shifting landscape of global wealth: Future-proofing prosperity in a ti...
In some instances the impact of this shift will be shaped by local factors, such as demographic changes. In other instances this shift will reflect shared characteristics, as demonstrated by the greater popularity of overseas investing among younger high-net-worth individuals (HNWIs) brought up in an era of globalisation. Whatever the drivers, the landscape of wealth is changing—from local to global, and from one focused on returns to one founded on personal values.
Despite rising economic concerns and a tradition of investor home bias in large parts of the world, the new landscape of wealth appears less interested in borders. According to a survey commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit (EIU), younger HNWIs are substantially more enthusiastic about foreign investing. The U.S. is a particularly high-profile example of a country where a long-standing preference for investments in local markets appears set to be transformed.
Click the thumbnail below to download the global executive summary.
Read additional articles from The EIU with detail on the shifting landscape of global wealth in Asia, Canada, the U.S. and UK on RBC's website.
Demanding More
- Four in five bankers (81%) believe that banks will seek to differentiate on customer experience rather than products, according to a global survey of senior banking executives conducted by The Economist Intelligence Unit. Mastering both customer experience and digital marketing are ranked as top strategic priorities for the next four years.
17775
Related content
![Branching out: can banks move from city centres to digital ecosystems?](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/temenos_perspectives_header-min_1.jpg?itok=bhK1Cgzl)
Branching out: can banks move from city centres to digital ecosystems?
Crunch time for banks
Bankruptcy comes two ways, Ernest Hemingway wrote: “gradually, then suddenly”. Such has been high-street banking’s fate at the turn of the decade. Justifying the axing of a fifth of Santander’s branches, deputy chief executive Tony Prestedge told the BBC that branch transactions at the eurozone’s largest retail bank had fallen by a third in the two years prior to the covid-19 pandemic—before they plunged by half during the lockdowns of 2020. “The pandemic has ‘concertinaed’ five to ten years of change into a year,” said Mr Prestedge.
The rapid collapse of branch-based banking is an acceleration of a trend that The Economist Intelligence Unit’s global banking survey, now in its eighth year, has long seen coming. In the latest survey, conducted in early 2021, just under two-thirds (65%) of banking executives agreed that the branch-based model will be “dead” within five years, up from 59% last year and 35% in 2018 (see Figure 1). In 2018 69% of Europe-based respondents disagreed with the statement—today the same proportion agree.
This year’s survey finds that branch closures and continued pressure from non-traditional competitors have triggered a wholesale rethinking of banking priorities and business models among banking executives.
Just under two thirds (65%) of bankers now believe that the branch-based model will be “dead” within five years, up from 35% four years ago. The rise has been sharpest in Europe and North America.
Banks in 2021 face competition from all sides. New, nimbler competitors including fintech startups, payment players, superapp platforms and tech giants continue to gain market share from incumbent banks as more non-traditional players gain the ability to offer more traditional banking services. A number of youthful fintechs have landed banking charters in the past year, including Varo and Square, enabling them to take deposits and extend credit. The growth of capital markets and central banks’ tentative experiments in digital currency further threaten banks’ very raison d’être.
But banks are coming out fighting. The stumble of some consumer challenger banks over the course of the pandemic—firms such as Monzo and Revolut struggled with sharp falls in revenue and customer complaints over missing funds—has put smartphonefriendly, slick interfaces in sharp contrast with the dour reliability and brand recognition of established banks. Critically, customers appear to remain reluctant to trust digitallynative challengers with salary deposits. Many established banks, spurred by rapid consumer change forced by the pandemic, are hopeful that through strategic partnerships and investments in technology they can be the best of both for consumers: a trusted banking partner, and purveyors of whizzy, consumer-friendly banking experiences.
Customer experience: the currency of competition
This year’s survey reveals a dramatic shift in priorities. Five years ago, as banking costs soared due to new regulatory requirements worldwide, banks were focused on cutting costs and boosting margins to maintain shareholders’ return-on-equity. Today, customer experience and digital marketing are top priorities for executives as they strive to compete with challengers’ frictionless onboarding, budget planning and perks such as free international payments.
![Capturing value in the cloud Capturing value in the cloud](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_1920x450.jpg?itok=Od9nNkrR)
Capturing value in the cloud
In his latest letter to shareholders, JPMorgan Chase chief executive Jamie Dimon does not hold back in his embrace of cloud technology. “We cannot overemphasise the extraordinary importance of new technology in the new world,” he writes, referring to the turbocharging effect that covid-19 has had on the adoption of the cloud and artificial intelligence (AI) in financial services.
Before the pandemic, not all banks were quick to spot the advantages in offloading applications to the cloud, where virtually unlimited computing power allows enormous efficiencies. Banks have generally been slower to take to cloud computing than other sectors. But the adoption of software as a service (SaaS) and cloud infrastructure—for additional processing capacity, improved service capabilities and to outsource data storage—has accelerated since the start of the pandemic, as banks seize an opportunity to cut costs and ramp up their digital transformation projects.
Last year saw a flurry of deals. HSBC committed to using Amazon Web Services to develop new digital products and support security and compliance standards, while Wells Fargo has signed on Microsoft and Google as public cloud providers. Google has agreed similar partnerships with Goldman Sachs and Deutsche Bank.
This comes as established banks figure out how to use incumbency to fend off fintechs and “challenger” banks, while the newer entrants use the cloud to advance quickly into new market opportunities.
In a new survey of IT executives in the banking sector, conducted by The Economist Intelligence Unit and supported by Temenos, more than seven in ten (72%) report that incorporating the cloud into their organisation’s products and services will help them to achieve their business priorities. Just under half (47%) say that it will do so “to a great extent”, with Latin American respondents the most bullish (see Figure 1).
Microsoft, a large player in cloud services, believes that the pandemic has accelerated cloud adoption in four ways that go beyond cost considerations. The first is creation of economic efficiency, by moving away from reliance on a clunky computer mainframe environment. Second is enabling agility and speed to market by, for example, improving the customer onboarding experience in retail banking. Third is reimagining the modern workplace and process modernisation to increase productivity, while fourth is digital innovation through, for instance, the adoption of AI.
![Global wealth: Future-proofing prosperity Global wealth: Future-proofing prosperity](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_images_2.png?itok=ryab_8yt)
The shifting landscape of global wealth: Future-proofing prosperity in a ti...
In some instances the impact of this shift will be shaped by local factors, such as demographic changes. In other instances this shift will reflect shared characteristics, as demonstrated by the greater popularity of overseas investing among younger high-net-worth individuals (HNWIs) brought up in an era of globalisation. Whatever the drivers, the landscape of wealth is changing—from local to global, and from one focused on returns to one founded on personal values.
Despite rising economic concerns and a tradition of investor home bias in large parts of the world, the new landscape of wealth appears less interested in borders. According to a survey commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit (EIU), younger HNWIs are substantially more enthusiastic about foreign investing. The U.S. is a particularly high-profile example of a country where a long-standing preference for investments in local markets appears set to be transformed.
Click the thumbnail below to download the global executive summary.
Read additional articles from The EIU with detail on the shifting landscape of global wealth in Asia, Canada, the U.S. and UK on RBC's website.
Branching out: can banks move from city centres to digital ecosystems?
- As the branch closures of covid-19 accelerate consumer shifts to online banking, 65% of bankers now believe that the branch-based model will be “dead” within five years, up from 35% four years ago, according to new research from The Economist Intelligence Unit.
- Four in five (81%) bankers believe that banks will seek to differentiate on customer experience rather than products. Mastering both customer experience and digital marketing are ranked as top strategic priorities over the next four years.
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![Demanding More](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/temenos_article_2_perspectives_header_1-min.jpg?itok=q-J0ulBE)
Demanding More
More than a year after much of the world went into some form of lockdown, many customers previously resistant to digital banking have grown accustomed to it, and most do not plan to return to their old banking habits. A survey of people in the US aged 18 to 65, conducted by Chase Bank, found that four in five now prefer to manage their finances digitally rather than in person, and three-quarters are likely to continue using digital payment options even after the covid-19 threat subsides. These findings are mirrored in many other countries around the world.
“Overnight people became digital, when it was supposed to take ten years,” says Michal Kissos Hertzog, chief executive of Pepper, an Israeli digital bank, of the impact of the covid-19 pandemic. “It doesn’t matter if you are Gen X or Gen Z—everyone became digital.”
Banks have been forced to adapt as a result. “All banks have had to up their game, so competition has become stronger,” says Ms Kissos Hertzog. The shift to online brought by the pandemic has proven a boon for digital-only banks. As of January 2021, 14m Brits (27% of UK adults) had a digital-only bank account—16% growth from January 2020 and a threefold increase compared to January 2019.
The shift has brought forward expectations of the demise of the branch, traditionally the centre of the retail banking experience. According to our annual global banking survey, supported by Temenos, 65% of bankers now believe that the traditional branch-based banking model will be “dead” within five years, while 71% expect cash to represent less than 5% of all retail transactions globally by 2025.
Senior executives report that technology is driving customer experience. Survey respondents cited changing customer behaviours and demands around digital banking, the new technologies needed to understand and serve customers better, and regulation on digital technology (including data protection, which dictates how banks can interact with customers and their data) as the top three trends that will have the biggest impact on banks in their countries by 2025.
Consequently, survey respondents’ top strategic priorities by 2025 are all customer-focused: improving customer experience and engagement, including personalisation and intimacy; mastering digital marketing; and migrating client usage from physical to digital channels.
At Pepper, the focus has been personalisation. When individual customers open the bank’s app, they see a homepage personalised to their specific actions, says Ms Kissos Hertzog. “Different customers will see different products, will receive different marketing.” The goal is a “segment of one”, tailoring the experience precisely to the individual consumer based on their activity and preferences. “The more personalised the service is, the more engaged customers are.”
Technology investment
According to survey respondents, banks’ top investments in customer-related technology include developing artificial intelligence (AI) platforms, such as digital advisors and voiceassisted engagement channels, and advanced and predictive data analytics for customer experience.
Adoption of this technology starts with data, says Ms Hertzog. “Banks are sitting on a humongous amount of data, but they are not doing a good job [of using it],” she says. “I want to use data to give customers a better understanding of their money, to help them decide how to save, to budget, whether they should invest in the stock market."
But she cautions against focusing investment on specific technologies just because they are the latest trend. “I’ve never heard my users saying, ‘I chose you because you have the best artificial intelligence of all banks’. What they care about is that they will have good service, that they’ll see the benefits from their bank, and that we meet their needs,” she says.
“When we speak about technology, it’s important to understand that the technology is not the target, it’s a means to an end. Of course, we have to have great AI, and we are implementing machine learning and blockchain—we’re doing all of that. But we are doing all of that in order to give the best customer experience.”
![Capturing value in the cloud Capturing value in the cloud](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_1920x450.jpg?itok=Od9nNkrR)
Capturing value in the cloud
In his latest letter to shareholders, JPMorgan Chase chief executive Jamie Dimon does not hold back in his embrace of cloud technology. “We cannot overemphasise the extraordinary importance of new technology in the new world,” he writes, referring to the turbocharging effect that covid-19 has had on the adoption of the cloud and artificial intelligence (AI) in financial services.
Before the pandemic, not all banks were quick to spot the advantages in offloading applications to the cloud, where virtually unlimited computing power allows enormous efficiencies. Banks have generally been slower to take to cloud computing than other sectors. But the adoption of software as a service (SaaS) and cloud infrastructure—for additional processing capacity, improved service capabilities and to outsource data storage—has accelerated since the start of the pandemic, as banks seize an opportunity to cut costs and ramp up their digital transformation projects.
Last year saw a flurry of deals. HSBC committed to using Amazon Web Services to develop new digital products and support security and compliance standards, while Wells Fargo has signed on Microsoft and Google as public cloud providers. Google has agreed similar partnerships with Goldman Sachs and Deutsche Bank.
This comes as established banks figure out how to use incumbency to fend off fintechs and “challenger” banks, while the newer entrants use the cloud to advance quickly into new market opportunities.
In a new survey of IT executives in the banking sector, conducted by The Economist Intelligence Unit and supported by Temenos, more than seven in ten (72%) report that incorporating the cloud into their organisation’s products and services will help them to achieve their business priorities. Just under half (47%) say that it will do so “to a great extent”, with Latin American respondents the most bullish (see Figure 1).
Microsoft, a large player in cloud services, believes that the pandemic has accelerated cloud adoption in four ways that go beyond cost considerations. The first is creation of economic efficiency, by moving away from reliance on a clunky computer mainframe environment. Second is enabling agility and speed to market by, for example, improving the customer onboarding experience in retail banking. Third is reimagining the modern workplace and process modernisation to increase productivity, while fourth is digital innovation through, for instance, the adoption of AI.
![Global wealth: Future-proofing prosperity Global wealth: Future-proofing prosperity](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_images_2.png?itok=ryab_8yt)
The shifting landscape of global wealth: Future-proofing prosperity in a ti...
In some instances the impact of this shift will be shaped by local factors, such as demographic changes. In other instances this shift will reflect shared characteristics, as demonstrated by the greater popularity of overseas investing among younger high-net-worth individuals (HNWIs) brought up in an era of globalisation. Whatever the drivers, the landscape of wealth is changing—from local to global, and from one focused on returns to one founded on personal values.
Despite rising economic concerns and a tradition of investor home bias in large parts of the world, the new landscape of wealth appears less interested in borders. According to a survey commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit (EIU), younger HNWIs are substantially more enthusiastic about foreign investing. The U.S. is a particularly high-profile example of a country where a long-standing preference for investments in local markets appears set to be transformed.
Click the thumbnail below to download the global executive summary.
Read additional articles from The EIU with detail on the shifting landscape of global wealth in Asia, Canada, the U.S. and UK on RBC's website.
Risky business: Financial compliance and covid-19
The covid-19 pandemic has kept workers confined to their homes for months on end, significantly increasing the role of digital tools in keeping a firm connected. In heavily regulated sectors like finance, the sheer volume of communications that is now generated over digital channels is raising crucial questions about whether, how and to what extent organisations should exercise oversight of employee communications.
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![Global wealth: Future-proofing prosperity Global wealth: Future-proofing prosperity](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_images_2.png?itok=ryab_8yt)
The shifting landscape of global wealth: Future-proofing prosperity in a ti...
In some instances the impact of this shift will be shaped by local factors, such as demographic changes. In other instances this shift will reflect shared characteristics, as demonstrated by the greater popularity of overseas investing among younger high-net-worth individuals (HNWIs) brought up in an era of globalisation. Whatever the drivers, the landscape of wealth is changing—from local to global, and from one focused on returns to one founded on personal values.
Despite rising economic concerns and a tradition of investor home bias in large parts of the world, the new landscape of wealth appears less interested in borders. According to a survey commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit (EIU), younger HNWIs are substantially more enthusiastic about foreign investing. The U.S. is a particularly high-profile example of a country where a long-standing preference for investments in local markets appears set to be transformed.
Click the thumbnail below to download the global executive summary.
Read additional articles from The EIU with detail on the shifting landscape of global wealth in Asia, Canada, the U.S. and UK on RBC's website.
![](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/westpac%20hero%20image_0.png?itok=h9CwEJ0E)
Fintech in ASEAN
To better understand the opportunities and challenges in developing a fintech business in seven ASEAN markets, The Economist Intelligence Unit conducted wide-ranging desk research supplemented by seven in-depth interviews with executives in Australia and ASEAN.
Download report and watch video interview to learn more.
![](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/KPMG%20Image.png?itok=55lRo_f-)
Risks and opportunities in a changing world
Read our Taxing digital services, U.S. tax reform: The global dimension, & Planning for life after NAFTA articles by clicking the thumbnails below.
Making up for lost time: The race to digitise banks in Latin America
Latin America had a late start in the digitisation of financial services but has ramped up its efforts in the past five years, making up for lost time. There is now a bustling ecosystem with over 1,166 financial technology (fintech) start-ups in the region. Governments have also recognised the potential of digitisation and have developed specific regulation to level the playing field between top-tier banks and new entrants.
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![Global wealth: Future-proofing prosperity Global wealth: Future-proofing prosperity](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_images_2.png?itok=ryab_8yt)
The shifting landscape of global wealth: Future-proofing prosperity in a ti...
In some instances the impact of this shift will be shaped by local factors, such as demographic changes. In other instances this shift will reflect shared characteristics, as demonstrated by the greater popularity of overseas investing among younger high-net-worth individuals (HNWIs) brought up in an era of globalisation. Whatever the drivers, the landscape of wealth is changing—from local to global, and from one focused on returns to one founded on personal values.
Despite rising economic concerns and a tradition of investor home bias in large parts of the world, the new landscape of wealth appears less interested in borders. According to a survey commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit (EIU), younger HNWIs are substantially more enthusiastic about foreign investing. The U.S. is a particularly high-profile example of a country where a long-standing preference for investments in local markets appears set to be transformed.
Click the thumbnail below to download the global executive summary.
Read additional articles from The EIU with detail on the shifting landscape of global wealth in Asia, Canada, the U.S. and UK on RBC's website.
![](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/westpac%20hero%20image_0.png?itok=h9CwEJ0E)
Fintech in ASEAN
To better understand the opportunities and challenges in developing a fintech business in seven ASEAN markets, The Economist Intelligence Unit conducted wide-ranging desk research supplemented by seven in-depth interviews with executives in Australia and ASEAN.
Download report and watch video interview to learn more.
![](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/KPMG%20Image.png?itok=55lRo_f-)
Risks and opportunities in a changing world
Read our Taxing digital services, U.S. tax reform: The global dimension, & Planning for life after NAFTA articles by clicking the thumbnails below.
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![Trends Shaping Private Markets in 2021](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/adams_street_hero.jpg?itok=NNvt9LSi)
Leveraging Opportunity in Change: Navigating the Trends Shaping Private Mar...
2020 brought profound change that will continue to influence financial markets for years to come. The covid-19 pandemic hampered economies and exacerbated market volatility, leaving investors to process the short- and longer-term impacts. Geopolitical tensions and growth in anti-globalist policies are also creating structural changes which investors must factor into their investment strategies. Despite increasing risks, however, investors are confident that private-market assets will continue to offer opportunities for long-term growth.
This report explores the long-term trends shaping private-market investors decisions and the strategies managers are deploying to continue generating returns despite growing global risks. The research is based on in-depth qualitative interviews and desk research, and a survey covering 110 limited partners (LPs)—specifically, investors that commit capital to private markets, including pension funds, institutional accounts, and investment and portfolio managers—in Asia, Europe and North America. The key findings from the survey include:
Eighty percent of respondents agree that private markets are less susceptible to short-term volatility than public markets.
Eighty-five percent of respondents expect private markets to continue to outperform public markets in the long term.
Respondents expect Asia-Pacific to offer the best private-market investment opportunities in 2021, followed by North America.
Respondents expect the financial services, technology and healthcare sectors to offer the best private-market investment opportunities in 2021.
Respondents plan to invest in companies with multiple growth strategies, and in funds with experienced general partners for risk mitigation.
Respondents anticipate that the following risk scenarios will have the greatest impact on their private-market investment strategies in 2021: the continued spread of covid-19 and vaccine distribution issues; and growth in anti-globalist policies, such as trade barriers and tariffs.
![Global wealth: Future-proofing prosperity Global wealth: Future-proofing prosperity](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_images_2.png?itok=ryab_8yt)
The shifting landscape of global wealth: Future-proofing prosperity in a ti...
In some instances the impact of this shift will be shaped by local factors, such as demographic changes. In other instances this shift will reflect shared characteristics, as demonstrated by the greater popularity of overseas investing among younger high-net-worth individuals (HNWIs) brought up in an era of globalisation. Whatever the drivers, the landscape of wealth is changing—from local to global, and from one focused on returns to one founded on personal values.
Despite rising economic concerns and a tradition of investor home bias in large parts of the world, the new landscape of wealth appears less interested in borders. According to a survey commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit (EIU), younger HNWIs are substantially more enthusiastic about foreign investing. The U.S. is a particularly high-profile example of a country where a long-standing preference for investments in local markets appears set to be transformed.
Click the thumbnail below to download the global executive summary.
Read additional articles from The EIU with detail on the shifting landscape of global wealth in Asia, Canada, the U.S. and UK on RBC's website.
![](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/westpac%20hero%20image_0.png?itok=h9CwEJ0E)
Fintech in ASEAN
To better understand the opportunities and challenges in developing a fintech business in seven ASEAN markets, The Economist Intelligence Unit conducted wide-ranging desk research supplemented by seven in-depth interviews with executives in Australia and ASEAN.
Download report and watch video interview to learn more.
Leveraging Opportunity in Change: Navigating the Trends Shaping Private Markets in 2021 and Beyond
2020 brought profound change that will continue to influence financial markets for years to come. The covid-19 pandemic hampered economies and exacerbated market volatility, leaving investors to process the short- and longer-term impacts. Geopolitical tensions and growth in anti-globalist policies are also creating structural changes which investors must factor into their investment strategies. Despite increasing risks, however, investors are confident that private-market assets will continue to offer opportunities for long-term growth.
Related content
![Global wealth: Future-proofing prosperity Global wealth: Future-proofing prosperity](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/hero_images_2.png?itok=ryab_8yt)
The shifting landscape of global wealth: Future-proofing prosperity in a ti...
In some instances the impact of this shift will be shaped by local factors, such as demographic changes. In other instances this shift will reflect shared characteristics, as demonstrated by the greater popularity of overseas investing among younger high-net-worth individuals (HNWIs) brought up in an era of globalisation. Whatever the drivers, the landscape of wealth is changing—from local to global, and from one focused on returns to one founded on personal values.
Despite rising economic concerns and a tradition of investor home bias in large parts of the world, the new landscape of wealth appears less interested in borders. According to a survey commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit (EIU), younger HNWIs are substantially more enthusiastic about foreign investing. The U.S. is a particularly high-profile example of a country where a long-standing preference for investments in local markets appears set to be transformed.
Click the thumbnail below to download the global executive summary.
Read additional articles from The EIU with detail on the shifting landscape of global wealth in Asia, Canada, the U.S. and UK on RBC's website.
![](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/westpac%20hero%20image_0.png?itok=h9CwEJ0E)
Fintech in ASEAN
To better understand the opportunities and challenges in developing a fintech business in seven ASEAN markets, The Economist Intelligence Unit conducted wide-ranging desk research supplemented by seven in-depth interviews with executives in Australia and ASEAN.
Download report and watch video interview to learn more.
![](https://impact.econ-asia.com/perspectives/sites/default/files/styles/featured_thumbnail/public/KPMG%20Image.png?itok=55lRo_f-)
Risks and opportunities in a changing world
Read our Taxing digital services, U.S. tax reform: The global dimension, & Planning for life after NAFTA articles by clicking the thumbnails below.