European banking trends for 2021: Top 4 in store for the industry

1 February 2021

To say that 2020 has been eventful would be an understatement. No one could have predicted how these past 12 months would pan out and how big an impact the pandemic would have on the global economy and the banking sector specifically.

As such, several new banking trends have emerged as lenders attempt to safely navigate the challenges posed by the pandemic.


1. Sharing ATM infrastructure

The sharing of ATM infrastructure is one trend that will continue to rise this year, with  it already common practice in some European markets.

In Belgium,a new initiative called Batopin has emerged to run a new ATM network for the country’s four largest banks with the aim of providing 95 percent of Belgians access to a modern ATM service within five kilometres of their home or business.
The inherent challenges and costs relating to ownership of ATMs and bricks and mortar branches amid tighter lockdown restrictions and access to digital banking solutions will ensure this trend continues to expand.

Within this context, many banks will also aim to reduce the costs through technology-led investments, cloud migration, and pooling infrastructure.

While these methods don’t always result in reduced costs, the overall goal of these actions is to ensure banking customers maintain access to their money and are provided an enhanced user experience.

2. Cashback for everyone

“Cashback”sees customers receive money back on their purchases.

However, the UK government recently outlined its plan to expand this option for accessing cash, allowing customers to receive cashback from retail shops, without needing to buy anything.

Receiving cashback without having purchase anything in-store offers customers greater flexibility and access to cash at a time when traditional, physical channels are limited by the pandemic.

This new approach may provide answers for remote rural communities which struggle to access cash and find ATMs in their area. There are opportunities to develop this feature with greater safety for users, as it can have both online and offline modes with managed limited amounts on the customer accounts, providing tighter security.

Yet, the roll out of this service does face challenges. It may be too difficult for supermarkets and smaller convenience businesses to implement. It’s also predicated on these businesses having access to cash themselves.

That said, it is important not to fall into the trap of shifting the burden onto small businesses. They are already under significant pressure because of changing consumer behaviours and, of course, the pandemic.

The benefits to the retailer should be more footfall and lower costs of cash handling. Small stores full of consumers only wanting access to cash for which the retailer cannot charge is an outcome that will not help revive communities.

3. Community-led initiatives and remote banking Another banking trend that will continue in 2021 is branch closures.But thankfully, more community-led initiatives are expected to emerge to address the lack of access to cash in remote areas.

The LINK delivery fund allows communities to request a new ATM in their desired area. However, the next generation of bank branches will need to be automated, cost-effective, smaller, and available 24/7.

New approaches like these will give banks the ability to receive more deposits, improve overall efficiency and increase footfall compared with legacy branches.

This shift towards “remote banking” is essential, with bank branches at risk of being replaced by alternative solutions capable of addressing rural customers’ needs. If banks do not produce lean, smart, remote, around-the-clock branches, somebody else will – whether it be community-based or even independent ATM deployers.The principle of white labellingis an essential component in this new bank branch landscape. If this new remote banking model is adopted, it is likely that branch sharing will become commonplace.

Finally, as customer experience is central to any business model, banks must have a good channel mix: a first in and first out channel policy is rarely the best option for attracting new,and retaining old, customers.

Older channels may be revived, with video-banking capable of becoming a mainstay in this  new 24-hour, remote banking branch model.

4. Cybersecurity with a holistic approach The number of cyber-attacks on banks will continue to rise in 2021.

This affects not only digital banking channels used for transactions, but also ATMs. These are often the biggest vulnerability in a bank's IT security infrastructure due to outdated hardware and software.

With the increasing prevalence of remote working, bank employees only have access to their banking systems through remote access. This area also reveals weaknesses that can be exploited by cyber criminals. Special cybersecurity solutions on employees' computers will be unavoidable.

In addition, on the way to becoming a next-gen branch, financial institutions will have to protect themselves even more from cyber-attacks. In the near-future assisted self-service devices - which are fully owned and secured by a financial institution - will serve as the interface between the customer and their bank.

These devices must be sufficiently secured in order to gain the trust of customers. The security aspect may become an important differentiator against other channels such as online or mobile, which the customer is also responsible for protecting.

Financial institutions will have to look more intensively at cyber security and corresponding solutions this year and actively work to ensure that both their customers' personal data and their systems are protected.

Monitoring the emerging trends in 2021

The pandemic has resulted in banks providing a better customer banking experience by refining the quality of their financial services.

Despite the closure of bank branches, the aforementioned trends for the 2021 highlight that banks are already looking at solutions capable of solving problems that have been accelerated by the pandemic.

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