Financial services is undergoing a paradigm shift that is forcing incumbent retail banks to rethink growth strategies as they struggle to remain relevant. Growing competition from BigTechs, FinTech firms, and challenger banks has added to the complexity created by increasingly stringent regulatory and compliance requirements. Customers now expect a seamless customer journey and personalized offerings because they have become accustomed to top-notch individualized service from GAFA giants Google, Apple, Facebook, and Amazon. The changing ecosystem offers established banks new, unexplored opportunities and encourages a transition beyond traditional products to meet the exacting requirements of today’s customers. Bank collaboration with FinTech and RegTech partners is becoming commonplace. Incumbents are exploring point-of-sale financing and unsecured consumer lending, while they also boost their digital channel competencies to reach a broader customer base. Banks are beginning to accept open APIs and are working with third-party specialists to create an open shared marketplace. Technological advancements such as AI are fueling efforts to evolve customer onboarding and touchpoint processes. Increasingly, banks are turning to design thinking methodology to understand the customer journey, extract deep insights, and develop a more refined user experience across the customer lifecycle. Our analysis of the top retail banking trends for 2020 offers a glimpse into the fast-changing banking ecosystem and explores the tools and solutions being used to face new-age challenges.

1. Top Trends in Retail
Banking: 2020
November 2019
Link: https://www.capgemini.com/top-trends-in-
2020/

2. 2© Capgemini 2019. All rights reserved |Retail Banking Trends 2020 | November 2019
Use of Blockchain solutions to improve KYC
and identity management programs
Banks are exploring
unsecured consumer lending
Collaboration with FinTechs to explore
point-of-sale financing
Workforce preparation for Digital-era
The Open X ecosystem
Contextual banking
Intelligent Bank Open Banking
Deep Customer Insights
Banks are leveraging AI to create a
seamless customer onboarding journey
Banks embrace design thinking
Data-Driven Compliance
Collaboration with RegTechs
continues to rise
Technology innovation is driving banks’
risk compliance initiatives
04
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07
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09
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Top Trends in Retail Banking for 2020 by Capgemini

3. 3© Capgemini 2019. All rights reserved |Retail Banking Trends 2020 | November 2019
Source: Capgemini Financial Services Analysis, 2019
Trend 1: Digital-era workforce preparation has become a top priority
Impact of technological
advancements and
rapid digital disruption
3© Capgemini 2019. All rights reserved |
Within this dynamic ecosystem, employees’
legacy competencies are quickly becoming
obsolete.
Traditional banks must future-proof their
workforce to compete with new-age digital
financial institutions
Traditional training cannot meet changing
business priorities and the ever-shifting
demand for required capabilities
Bank staff require skills in AI, ML to derive
insights and automate processes and
improve customer experience.
Top Trends in Retail Banking for 2020 by Capgemini
Intelligent
Bank
Open
Banking
Deep
Customer
Insights
Data-
Driven
Compliance

4. 4© Capgemini 2019. All rights reserved |Retail Banking Trends 2020 | November 2019
Trend 2: Banks are collaborating with FinTechs to explore point-of-sale financing
Source: Capgemini Financial Services Analysis, 2019
4© Capgemini 2019. All rights reserved |
Drivers
Banks are collaborating with
FinTechs to move into the PoS
financing
Banks still require FinTech
technology and talent to
drive PoS financing
PoS financing offers vast market
potential and is gaining traction
among online shoppers.
Banks need FinTech’s technology to
create a winning combination
Banks cannot ignore the shift in
consumer spending behavior
toward PoS financing
More customers will get onboard as
technology advancements simplify
adoption of PoS financing
FinTech firms have established a
PoS lending ecosystem
A bank/FinTech platform will
benefit merchants as they can
drive sales by offering customers
instant loans at no extra cost
Implications
Intelligent
Bank
Open
Banking
Deep
Customer
Insights
Data-
Driven
Compliance
Top Trends in Retail Banking for 2020 by Capgemini

5. 5© Capgemini 2019. All rights reserved |Retail Banking Trends 2020 | November 2019
Trend 3: Banks are slowly beginning to explore unsecured consumer lending through
digital channels
Source: Capgemini Financial Services Analysis, 2019, TransUnion, “FinTechs Continue to Drive Personal Loan Growth,” February 21, 2019, https://newsroom.transunion.com/fintechs-continue-to-drive-personal-loans-to-
record-levels/.
Future Growth Opportunity in
Unsecured Lending
Person loan balances
in the US increased
by USD 21 billion
in 2018
In US, FinTech loans
now comprise 38% of
all unsecured personal
loan balances
In US, average
unsecured personal
loan debt per borrower
is USD 8,402 as of
Q4, 2018
Size of personal loan
balances in the US is
USD 138 billion as
of 2018
Personal loan
originations in the US
increased by 22%
during Q3, 2018
Intelligent
Bank
Open
Banking
Deep
Customer
Insights
Data-
Driven
Compliance
Top Trends in Retail Banking for 2020 by Capgemini

6. 6© Capgemini 2019. All rights reserved |Retail Banking Trends 2020 | November 2019
Source: Capgemini Financial Services Analysis, 2019
Trend 4: Blockchain solutions being used to improve
KYC and identity management programs
6© Capgemini 2019. All rights reserved |
Benefits of using Blockchain in
KYC Process
One source
system for
customers to
upload KYC data
Improved
data security
Bank accesses
KYC data
from blockchain
Immutable
database assures
data does not
change in time
Other institutions
verify KYC
already performed
by bank
Blockchain can
reduce
operational cost,
save time
Intelligent
Bank
Open
Banking
Deep
Customer
Insights
Data-
Driven
Compliance
Top Trends in Retail Banking for 2020 by Capgemini

7. 7© Capgemini 2019. All rights reserved |Retail Banking Trends 2020 | November 2019
Trend 5: Banks embrace design thinking
Source: Capgemini Financial Services Analysis, 2019; Medium, “What is Design Thinking? (And What Are The 5 Stages Associated With it?),”Benjamin Hunter Miller, September 5, 2017.
Design
Thinking
Methodology
Empathize Define
Ideate
Prototype
Test
Define the
challenge &
explore the human
context
Research, observe,
understand & create
a point of view
Brainstorm ideas
good & bad, don’t
stop at the obvious
Implement the
product, show &
don’t tell, start to
refine the product
Start creating,
experiment, fail
cheap & fast
Intelligent
Bank
Open
Banking
Deep
Customer
Insights
Data-
Driven
Compliance
Top Trends in Retail Banking for 2020 by Capgemini

8. 8© Capgemini 2019. All rights reserved |Retail Banking Trends 2020 | November 2019
Key Drivers
Complicated onboarding
experience may significantly
impact customer loyalty
Personalized experience that can
readily meet millennials’
expectations
Onboarding experiences from
Facebook and Amazon have
changed customers’ expectations
Banks can use AI to enhance
customer support services
Challenger banks also pose a threat
with quicker turnaround time
Expedited loan approval process
with AI powered risk assessment
Key Benefits
Trend 6: Banks are leveraging AI to create a seamless customer onboarding journey
Source: Capgemini Financial Services Analysis, 2019
8© Capgemini 2019. All rights reserved |
Intelligent
Bank
Open
Banking
Deep
Customer
Insights
Data-
Driven
Compliance
Top Trends in Retail Banking for 2020 by Capgemini

9. 9© Capgemini 2019. All rights reserved |Retail Banking Trends 2020 | November 2019
Trend 7: Collaboration with RegTechs continues to rise
Source: Capgemini Financial Services Analysis, 2019
9© Capgemini 2019. All rights reserved |
Rise of specialized RegTech players
Increasingly stringent
regulatory requirements
Technology enabling innovative compliance
solutions
Increasing cost of compliance
Legacy systems that
preclude efficient compliance
Greater volumes
of sensitive data to manage
Intelligent
Bank
Open
Banking
Deep
Customer
Insights
Data-
Driven
Compliance
Top Trends in Retail Banking for 2020 by Capgemini
Retail Banking Trends 2020 | November 2019

10. 10© Capgemini 2019. All rights reserved |Retail Banking Trends 2020 | November 2019
Trend 8: Technology innovation is driving banks’ risk-compliance initiatives
Source: Capgemini Financial Services Analysis, 2019
10© Capgemini 2019. All rights reserved |
Drivers
Data growth has created the need
for more effective reporting
Banks must update their legacy
systems with automation,
cognitive and AI
Increasingly complex regulations
around anti-money laundering
(AML) and KYC
Banks waiting to adopt technology
may wind up playing
catch-up with competitors
Advancements in ML, NLP, RPA
(robotic process automation), and
advanced data analytics
Banks must expand budgets to
cover workforce training
programs in compliance
Risk management in today’s
complex environment demands
effective handling of large
volumes of data
Collaboration with RegTechs to
help banks meet regulatory
requirements
Implications
Intelligent
Bank
Open
Banking
Deep
Customer
Insights
Data-
Driven
Compliance
Top Trends in Retail Banking for 2020 by Capgemini

11. 11© Capgemini 2019. All rights reserved |Retail Banking Trends 2020 | November 2019
Trend 9: The Open X ecosystem of the future will require players to work collaboratively
Source: Capgemini Financial Services Analysis, 2019
11© Capgemini 2019. All rights reserved |
Benefits of a Open X ecosystem
Hyper-personalization
Offerings customized
at individual level
Portfolio expansion
Leveraging products
of other ecosystem
partners
Customer penetration
Ability to reach new
customer segments
Process efficiencies
Creating operational
synergies working with
ecosystem players
Intelligent
Bank
Open
Banking
Deep
Customer
Insights
Data-
Driven
Compliance
Top Trends in Retail Banking for 2020 by Capgemini

12. 12© Capgemini 2019. All rights reserved |Retail Banking Trends 2020 | November 2019
Source: Capgemini Financial Services Analysis, 2019
12© Capgemini 2019. All rights reserved |
Trend 10: Contextual
banking empowers banks to
provide superior customer
experience
Drivers
The contextualized
experiences offered by
Netflix and Spotify – have
set new customer
experience standards.
Contextual banking can
optimize the execution of
every transaction
Customers expect banking
tasks to be simple, efficient,
appropriate to the context
Banks need to leverage data
from all sources and
channels to create a
contextual data repository
AI, and ML have enabled
banks to continuously learn
about consumer
preferences and create
personalized offers
Banks need to invest in big
data, advanced analytics,
and AI to build
data insights
Technology is enabling banks
to obtain real-time customer
data and target their
personalization
Contextual banking can
enable banks to initiate
cross-selling of products, or
services
Implications
Intelligent
Bank
Open
Banking
Deep
Customer
Insights
Data-
Driven
Compliance
Top Trends in Retail Banking for 2020 by Capgemini

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