JUNE 202419CXO INSIGHTSChad Schmookler, Senior Director, International Operations, InCommINNOVATIONS AND CHALLENGES FACING THE BANKING SECTORWhat are some of the major challenges and trends that have been impacting the banking sector lately?Ever-evolving consumer expectations continue to be a major challenge in the banking sector. In just the last decade alone, consumer behaviour has dramatically shifted to a `mobile first' model thanks to the proliferation of smart devices and the Internet of Things. Consequently, in addition to the traditional methodologies, financial institutions must now provide interaction landscapes that include mobile, social, open APIs, cross-platform integrations, and the like. Advances in technology have made today's consumers more financially literate than at any other time in history. Thus, expectations are more difficult to meet than ever.The rise of non-traditional banking institutions presents competitive challenges. As stated, massive advances in technology like artificial intelligence (AI) have led to unprecedented innovation activity in the banking sector. Essentially, traditional barriers to entry have been razed, allowing challenger banks and other pseudo-financial entities to gain headway in the market. New and appealing product offerings abound. The ongoing response from the traditional players will be interesting to watch.Security breaches and fraud pose significant risks to organizational success, customer retention, brand power, and corporate reputation. While ensuring customer security and data privacy is paramount, it has also become more costly and more difficult. The future of `secure banking' may look very different as bad actors and industry professionals go head-to-head. Oh, and you can bet both sides will be incorporating AI into the equation.Finally, as the world struggles to pull itself out of the economic crater left by COVID-19, fiscal free spending and inflationary central banking policy have led to a bleak short-term socio-economic outlook. Accordingly, central banks have been forced to fight inflation with interest rate hikes. This means banks must be nimble when it comes to strategy and diversification. The economic landscape has been both unpredictable and unkind as of late. We can all learn a lesson from the Silicon Valley bank debacle.Chad Schmookler
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