The Future of Retail Banking

Nobody could have predicted how quickly retail banking would change. In other circumstances, widespread digital payments and new mobile banking technologies weren’t even imaginable 15 years ago. Now that they are widely used, they have permanently changed how individuals and small companies do banking.

And the transition is still far from complete.

Analysts constructed five scenarios where credit unions and banks might take proactive measures to adjust to these changes after documenting and handicapping the potential outcomes.

Five Scenarios for Retail Banking in the Future

If these tendencies continue as predicted, analysts have created five possibilities for how events may unfold over the following ten years.

The Evolution of the Front-End

In this case, embedded finance will prosper, allowing for more significant disintermediation of the client data and financial services value chains.

The majority of customer interactions will thus be captured by Big Tech companies and fintech, while a small number of banks will handle risk mitigation and compliance tasks.

The winner takes all.

Consolidation will drive banks to join in the winner-takes-all situation to compete with financial technology and non-traditional banking and finance businesses. Consequently, a small number of established players and fintech firms will rule the banking industry.

The biggest, most tailored, and most practical platforms will draw customers. Scalability will be more crucial than ever since only the most prominent banks can assume the risk of undertaking huge investments.

A Wildly divergent Landscape

Consumers will start to doubt the worth and reliability of international organizations due to declining public trust and social segregation. Customers and assets will move to more neighborhood banks with thinner balance sheets.

After that, the banking value stream will separate into specialized parts. A trustworthy regional or local brand that controls the whole client connection will be able to provide banking products through smaller, community-focused banks. Large incumbent banks will have to decide whether to concentrate their attention on certain localities or use a B2B model to provide banks with more specialized infrastructure and back-office services.

Revival of Regulation

To guarantee a robust financial system, regulators will actively pursue non-traditional entrants, which will likely result in new laws.

Eventually, regulatory protectionism would allow banks to regain trust and their position as the primary supplier of financial goods and services. Increasing regulatory requirements, however, may also make it more difficult for banks to innovate, which might result in more incredible prices and increased standardization of goods and services.

Development of Central Bank Digital currencies

With the emergence of decentralized finance, cash usage would decline, and central bank digital currencies (CBDCs) would become more widespread.

The main bank account would eventually be turned over to central banks instead of the incumbent financial organizations. This would result in the loss of client information, an anchor of long-standing customer connections, declining margins, and a reduction in net interest revenue.


One thing is for sure: the outcome will be a significantly different competitive landscape than the one we have now, regardless of how the possibilities we identify play out.

However, there is space for disagreement over the magnitude and pace of the scenarios the analysts described. The article has been published by the editorial board of the Fintek Diary. Happy Reading. For more information please visit

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