Top innovation and digital transformation trends in retail banking

Raj Sangha
by Raj Sangha

The retail banking sector is constantly evolving, with digital innovation in banking accelerating at such a rate that it’s rapidly impacting the day-to-day relationships between banks and their customers.

Banks need to be agile, fast-moving and customer-focused in order to remain competitive – especially at a time where the Coronavirus pandemic is continuing to disrupt life as we know it.b

Here are some of the innovative banking trends impacting the retail banking sector, alongside some highly effective strategies.

Trends in Digital Innovation

Adoption of digital technology

The adoption of digital products has been a slow-burn. In recent years, younger, tech-savvy consumers have come to demand it, hence the popularity of neo-banks, while older generations are still reluctant.

But with the pandemic causing customers to significantly reduce visits to bank branches – 48% of retail bank customers are visiting branches less than before Covid-19, a Qudini survey found, while 43% are visiting the same and 9% are visiting more – consumers from all age groups are investing in digital products.

The demand for contactless payment options has grown significantly, with 79% of consumers intending to continue or increase their usage of self-checkout in retail after Covid-19, according to research by McKinsey.

And Deloitte found that 44% of retail banking customers are using their primary bank’s mobile app more often, and commercial banking is up too, with Bank of America’s business banking app growing by 117% in mobile check deposits.

Digital sales also experienced a huge increase, with Standard Chartered digital sales growing 50% year-on-year in H1 2020.

But as Deloitte pointed out in its 2021 Banking and Capital Markets Outlook, increased digital engagement does not necessarily translate into increased satisfaction (more on this later).

“In the United States, overall customer satisfaction with retail banks tends to decline as customers transition away from branches to digital-only banking relationships. Similarly, in Canada, while mobile banking usage has gone up, customer satisfaction with mobile offerings has declined. In Australia, too, satisfaction with problem resolution declined as interactions moved from in-person to digital.”

Omnichannel banking and customer experience

The adoption of new digital products and familiarity with new technologies has resulted in a huge spike in interest for omni-channel customer experiences. For instance, 62% of consumers want the ability to book virtual services like video banking, according to Qudini’s October 2020 survey of 2,000 US consumers.

Consumer expectations around digital products has also changed in recent years. New advances in digital technology have changed the way consumers shop – now customers expect to see innovation in banks that makes it possible to quickly, easily and seamlessly create new bank accounts or app for loans – and the expectation is to do these things in under a minute, as opposed to 5-10 minutes.

According to Forrester, “Organizations will work to determine what really matters to their customers, identify projects to improve important experiences, prioritize the efforts with the biggest potential upside for customers and the business, and then train their employees (and give them new tools) so that they can deliver the right experiences consistently.”

One road many banks are currently going down is personalization. During Covid-19, banks were tasked with having to provide real-time, accurate information and updates for customers, sparking a new wave of highly-personalized bank-to-customer relationships. Many leading financial institutions are taking banking innovations to the next level by investing in tailored websites and real-time financial recommendations (powered by AI tech).

A survey by Accenture found 48% of consumers have abandoned a purchase when the website failed to personalize the shopping experience – 91% said they’re more likely to do business with brands that recognize and reward them.

Unfortunately, Digital Banking Report found that three-quarters of financial institutions considered themselves ‘not adept’ and are using data and analytics to determine a next best action.

Consumers are becoming more fickle

McKinsey research found 76% of consumers have changed stores, brands or the way they shop since Covid-19, while Shopify found almost six in 10 (57%) are willing to shop at new brands or stores for the first time.

Perhaps it’s unsurprising that a study by Forrester revealed that spend on loyalty and retention marketing will increase by 30% in 2021 as CMOs assert control over the full customer lifecycle.

The main growth opportunity for banks comes from continued use of a company’s offering, making it essential to invest in building long-lasting customer relationships. From a bank innovation perspective, this means building full-fledged loyalty programs as opposed to frequency-based rewards programs.

Consumers are also incredibly fickle when it comes to waiting in lines outside of bank branches, especially during Covid-19. Qudini’s recent survey found that the wait time does not need to be long before significant revenue can be lost.

When asked how long customers are willing to wait in retail banks we found that:

The same applies to consumers from higher income households. They are less likely to leave branches because of long wait times, but are also less forgiving and less likely to return to the bank branches afterwards.

Read more insights from Qudini’s banking survey

Sustainability in banking

Sustainability, social responsibility and transparency have all taken on huge roles in the banking community as of late, with many of these elements taking a prime spot in the organizational purpose of a number of leading banks.

Three-quarters of respondents in Deloitte’s 2021 survey said their institutions will increase investment in climate-related initiatives, highlighting Goldman Sachs and UBS, who both increased their core sustainable investments significantly.

Modern consumers now expect banks, and all organizations for that matter, to be completely transparent about their internal goings-on, from supply chains and partners to diversity of employees to policies and processes.

As a result, this demand for transparency has crept its way into many financial brands’ products, such as including competitor prices and summaries in the customer journey to allow customers to see who has the best deals or offerings.

New infrastructures and partnerships

As we saw during the first global lockdown in April, 2020, many retail banks don’t have the IT infrastructure to support their employees when they’re unable to get to the office. As a result, there’s a huge demand for cloud computing. According to Daniel Newman, contributor to Forbes, “The widespread, sudden disruptions caused by the coronavirus have highlighted the value of having as agile and adaptable a cloud infrastructure as you can — especially as we are seeing companies around the world expedite investments in cloud to enable faster change in moments of uncertainty and disruption like we faced in 2020.”

Another initiative many banks are toying with is open banking, which is expected to double in size from 18 million users in 2019 to more than 40 million users by 2021, according to Juniper Research. This will see a number of innovations partnerships take place, and many retail brands will transform their ‘products’ into ‘platforms’.

Strategies for Digital Innovation

Engage customers with omnichannel banking

At present, banks should place the majority of their attention on retaining first-time users of digital channels through targeted offers and engagement strategies, as well as investing in digital, customer-facing technology that provides a seamless customer experience (such as chatbots).

Innovations should also expand into in-branch experiences, such as eliminating physical lines in branches with virtual queue management software, or allowing customers to schedule appointments for service, or creating self-service digital kiosks. In fact, these services have been proven to increase ROI and customer engagement. In addition, Deloitte found half of banks are considering live interactions with bank staff via ATMs, and installing self-service, contactless touchscreens.

Create virtual services such as video banking and digital lessons

With the increased demand for virtual services, many leading retail banks are enabling customers to book one-to-one appointments with video bankers. This approach builds brand relationships and allows customers to engage with your brand across multiple channels.

For example, retail bank NatWest uses the Qudini Appointment Scheduling Software to allow customers to book services such as financial health checks. This was a service the bank offered before Covid-19, and was incredibly popular with customers. During the pandemic, innovative banks such as NatWest stepped up its operations and included a range of Digital Lessons, which provided customers with advice on using digital tools or products such as online banking accounts or its banking apps.

Find out more about NatWest’s customer journey

Invest in hyperpersonalized product offerings

Many leading banks are investing in hyperpersonalized services that take into account key customer details (such as a customer’s financial well-being) to establish their core relationship with the bank. By doing so, banks can then integrate their disparate data architecture across the business and pair it with AI-powered analysis to create a 360-degree view of the customer – and deliver personalized services and products as a result.

Make sustainability and transparency a priority

With no universal standards of sustainability, banks wanting to bolster their sustainability efforts run the risk of greenwashing their brand initiatives, and more needs to be done in regards to communicating sustainability efforts and agendas to customers and to employees.

Deloitte recommends banks empower their chief sustainability officers to forcefully influence culture and behaviors across the institution, while being aided by the chief risk officer (CRO) to “ensure that climate risks are integrated into their risk management frameworks and practices and more directly embedded into stress-testing exercises.”

Worthwhile sustainability initiatives often take time, and can result in short-term financial sacrifices, but modern consumers have shown that they won’t accept anything less.


Right now banks need to focus their attention on increasing the engagement rates of first-time digital adopters, continuing to embrace omnichannel banking and personalization, increasing the number of digital channels for customer service, and creating powerful in-branch experiences.

For more information on how Qudini can help create powerful online and in-branch experiences within your bank, contact Raj on




Thank you!

A member of our team will be in touch.