Banking in 2020: 10 key trends to watch

1. Profits are good. It’s time to grow revenue.

Digital-mature banks are seeing improved ROEs. To put pressure on competitors, leaders will also need to use their tech strength to grow revenue via higher assets, liabilities and material fee income.

2. The best new entrants will find a pot of gold.

New entrants have attracted millions of customers. Consolidating their position requires newcomers to convince investors there’s gold at the end of their customer acquisition rainbow.

3. Mid-sized banks seek M&A shelter.

Following 2019’s payments M&A, we expect many mid-sized banks this year to seek whole-bank deals or selective business acquisitions—emphasizing technology scale and in-market distribution unions.

4. Intelligent tools give RMs extra powers.

What stays key: Smart, inventive employees augmented by the right technology. In 2020, commercial banking relationship managers, particularly, will use AI to enhance their ability to add value.

5. Open Banking changes data lakes to data rivers.

With the focus of Open Banking shifting to consumer data rights, expect banks to go full force on trust in 2020—protecting customers’ shared data even more and using it to add advisory value.

6. The era of purpose-driven banking arrives?

Consumers are increasingly aligning their buying to socially conscious providers. It means 2020 should see banks begin to align their efforts with social issues, placing purpose on par with profits.

7. Banks build trust around fees.

Unexpected account charges are one reason why some two billion adults remain unbanked. This year, banks may offer consumers relief from fees and help them make better money decisions.

8. Keeping an eye on credit quality.

As impairment charges rise and signs of a mild downturn mount, banks over the next 12 months will more closely watch the creditworthiness of their loan portfolios to minimize risks and losses.

9. Digital currencies emerge.

2020 could see digital currencies move from speculative to proven, supporting uptake by central banks to clear and settle payments instantaneously. The People’s Bank of China is nearly there.

10. Getting more specific about challengers.

The variety of banking players is clouding business model nomenclature and, thus, incumbents’ responses. 2020 may see the label "challenger bank" replaced with terms that are model-specific.