The banking industry’s resilience is being tested as banks navigate through a remarkable 2020 filled with uncertainties. The impact of COVID-19 has been about setting the tone for future operational models. Retail banks have shifted focus towards integrated risk management with a more holistic view of operational risks. Adapting to the new normal, banks have prioritized cost transformation while engaging customers virtually. Incumbents sought to be more responsible within fast-changing environmental conditions and ESG remained a critical focus. To provide more experiential services, banks are leveraging techniques such as segment-of-one to hyper-personalize offerings while aiming to humanize digital channels for increased engagement. Banks are also revamping middle and back offices, going beyond the front end leveraging intelligent processes. Open X is enabling banks to play on their strengths and use the expertise of ecosystem players. Going forward, banks are poised to become an enhanced one-stop shop by providing consumers value-adding FS and non-FS experiences. To acquire customers in cost-effective manner, retail banks are tapping value-based propositions ‒ such as POS financing and mortgage refinancing. Further, Banking-as-Service provides incumbents a way to provide their high-value offerings to other players. In preparation for the future, banks will be looking to improve their go-to-market agility by leveraging the benefits of cloud. This analysis outlines the top 10 trends in retail banking for 2021.

1. Top Trends in Retail
Banking: 2021
November 2020
Link: https://www.capgemini.com/top-trends-in-2020/

2. 2© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
Top Trends in Retail Banking for 2021 by Capgemini
Banks can reduce fraud with end-to-end value chain optimization
Banks leverage segment-of-one marketing to hyper-personalize offerings
Humanizing digital experiences will foster more authentic customer connections
Non-financial risks accelerated by the pandemic require robust strategy, oversight
COVID-19 pushes cost transformation into overdrive
ESG boosts responsible banking and resiliency
Business resilience
Customer centricity
Intelligent processes
Open Ecosystem
Go-To-Market agility
Banking-as-a-Service exemplifies Open X potential
Tomorrow’s frontrunners will offer consumers convenient one-stop shops
Banks tap low-interest, no-friction, value-based offerings to energize customer acquisition
Cloud’s silver lining ‒ business agility

3. 3© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
Trend 1: Non-financial risks accelerated by the pandemic require robust strategy,
oversight
Source: Capgemini Financial Services Analysis, 2020
Catalyst
Prone to human error, internal
legacy systems are at the root of
an alarming increase in NFR-
related losses
Banks will strategically adopt
integrated risk management
techniques that equally consider
financial and non-financial risks
Fluctuating external conditions ‒
lockdowns and third-party risk
may accelerate NFR incidents
Service providers that simplify and
manage NFR effectively will be in
demand
To manage compliance risks ‒
reputational, data leaks, and
third-party ‒ banks are
scrutinizing their outsourcing
assessment methods
Banks will retain lessons learned
after COVID-19 and more diligently
assess third-party outsource
partners
Impact
Top Trends in Retail Banking for 2021 by Capgemini

4. 4© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
Trend 2: COVID-19 pushes cost transformation into overdrive
Source: Capgemini Financial Services Analysis, 2020, ABBYY Case Study-DBS, “ABBYY Mobile OCR Makes On-theGo Loan Approval a Blast, Emerj, “AI in Banking – An Analysis of America’s 7 Top Banks
Traditional players are pushing for cost
transformation amidst the pandemic
Banks leverage cognitive
document automation
(CDA) using OCR (optical
character recognition) to
tackle paper-based
documentation challenges,
cut costs, and boost CX
Traditional players shift to
AI-automated bots to
process various data types
to optimize costs while
engaging with customers
on the front-end for
experiential transactions
DBS adopted ABBYY Mobile OCR to offer
Quick Credit, a mobile app that allows DBS
customers to apply for loans on the go
JP Morgan‘s Contract Intelligence (COiN)
chatbot analyzes legal documents and
extracts essential data points and clauses
Top Trends in Retail Banking for 2021 by Capgemini

5. 5© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
Trend 3: Cloud’s silver lining ‒ business agility
Source: Capgemini Financial Services Analysis, 2020
5© Capgemini 2020. All rights reserved |
Top Trends in Retail Banking for 2021 by Capgemini
Competition
To compete in the market
with new-age players, banks
need a scalable and modular
operating environment.
Sluggish transformation
Banks have pursued digital
transformation for over a
decade yet struggle with
inefficiencies and poor CX.
IT cost
Banks’ legacy infrastructure
racks up significant IT
maintenance costs ‒ hitting the
bottom line.
Cost of ownership goes down as IT
maintenance and running costs are
slashed by up to 77%.
Modern apps accelerate the
transformation journey
Business continuity and
disaster recovery
capabilities strengthened
Cloud
adoption

6. 6© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
Trend 4: Banking-as-a-Service exemplifies Open X potential
Source: Capgemini Financial Services Analysis, 2020
Top Trends in Retail Banking for 2021 by Capgemini
Banks can streamline and
augment their existing channels
to reduce cost of customer
acquisition.
Reinforced distribution
Banks can leverage the BaaS
networking effect to expand
their customer base.
Expand customer base
BaaS enables banks to generate
an alternative source of
revenue by monetizing their
banking infrastructure
Monetize core capabilities
Traditional banks
could harness growing
demand for embedded
finance.
With an effective BaaS
strategy, banks could
improve their financial
health and KPIs.

7. 7© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
Trend 5: Environmental, Social, and corporate Governance
boosts responsible banking and resiliency
7© Capgemini 2020. All rights reserved |
Top Trends in Retail Banking for 2021 by Capgemini
Green operations:
To reduce carbon footprint,
banks are emphasizing
sustainable operational
practices, such as
paperless process,
renewable energy, etc.
Product stewardship:
To encourage sustainable
banking adoption, banks
are offering green financial
products, such as recycled
cards, clean-vehicle loans
at reduced rates, etc.
Sustainable risk
management:
Banks are integrating the ESG
factor into their credit risk
model and actively gauging
the impact of climate risks
(and other non-financial risks)
on their operations.
Stellar performance:
Banks that prioritize
environmental and climate
risks boost their potential
to outperform their peers
and competitors.

8. 8© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
Key Drivers
Low-cost, fast-engaging, and no-friction
sales opportunities ‒ such as POS
financing ‒ are becoming more convenient
and easier to use.
Marketing initiatives and checkout signage
will drive customer acquisition and create
opportunities to boost upselling/cross-
selling efforts.
A growing trend among aggregators and
marketplaces is to simplify the lending
process further for both retailers and
consumers.
Hyper-localized financing could grow as
regional retailers and community banks
collaborate.
To assist consumers financially during the
ongoing pandemic, many central banks
have reduced interest rates. As a result, a
mortgage refinancing uptick is expected.
As banks manage their data more
effectively, they are poised to
cross-sell/upsell peripheral products ‒
such as mortgage refinancing and wealth
management products ‒ to existing
customers, which will reduce acquisition
costs and unlock new revenue sources.
Key Benefits
Trend 6: Banks tap low-interest, no-friction, value-based offerings to
energize customer acquisition
Source: Capgemini Financial Services Analysis, 2020
8© Capgemini 2020. All rights reserved |
Top Trends in Retail Banking for 2021 by Capgemini

9. 9© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
Trend 7: Banks leverage segment-of-one marketing to hyper-personalize offerings
Source: Capgemini Financial Services Analysis, 2020
9© Capgemini 2020. All rights reserved |
Top Trends in Retail Banking for 2021 by Capgemini
Target customers
Beefed up technological and
big data capabilities could help
banks create hyper-relevant
content to target customers
with surgical precision.
Mass customization
Effectively use customer
data to hyper-personalize
products and offerings for
each customer
Tailored pricing
Banks could customize prices
for each customer to improve
their revenue per customer.
High customer retention
Micro-segmentation can help banks attract
customers, earn more from existing ones, and
increase retention by reducing churn.

10. 10© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
Trend 8: Tomorrow’s frontrunners will offer consumers convenient one-stop shops
Source: Capgemini Financial Services Analysis, 2020
Top Trends in Retail Banking for 2021 by Capgemini
Better customer
engagement.
Example: account
aggregation services
Additional revenue
sources for banks.
Example: interplay of FS
and non-FS offerings
Enhanced insights
gathering.
Example: intelligent
source of customer data
Rebundling in banking

11. 11© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
Trend 9: Humanizing digital experiences will foster more authentic customer connections
Source: Capgemini Financial Services Analysis, 2020
Top Trends in Retail Banking for 2021 by Capgemini
 Intuitive interfaces
 On-demand
 Remote accessibility
 Suitable for routine and
generalized needs
 Emotional connection
 Trust
 One-on-one conversations
 Apt for complex and
personalized needs
 Hyper-personalized
 Deeper relationships
 Higher brand trust and loyalty

12. 12© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
Source: Capgemini Financial Services Analysis, 2020
Trend 10: Banks can reduce fraud with end-to-end
value chain optimization
12© Capgemini 2020. All rights reserved |
Top Trends in Retail Banking for 2021 by Capgemini
Banking
FraudOpen Banking
leading to
extensive sharing
of data with third
parties
High usage of
mobile and
online banking,
accelerated by
COVID-19
Rogue employee,
negligence or lack
of awareness

13. 13© Capgemini 2020. All rights reserved |Retail Banking Trends 2020 | November 2020
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