Banking Trends in 2021

Banking Trends
in 2021

Current situation in banking

There’s slight optimism about 2021 being better than 2020 because the banks are better prepared for the new normal and no additional shock waves are expected. However, the situation is far from rosy, so let’s briefly analyze the current struggles and digital responses that are happening today.

Struggles and digital responses

Overall economic situation

Because of the weaker economic condition of entire client groups, there is a lower demand for financial services and today this is one of the major concerns. There’s an expectation of recovery, but much slower than desired. No V or exponential U shaped recovery is forecasted anymore, even by the most optimistic analysts. 

This means even more work on the efficiency of internal operations, which in turn means more automation, and that means more software (everything as code), simplification of processes, as well as no code and low code, and all with the preference of cloud solutions. Improvements to existing systems, architecture optimizations, and cloud transformations are the tools to achieve greater resilience and efficiency. From a functional perspective, the key goal remains, which is to enable banks to win new customers entirely through digital means, which comes as no surprise in the current world wide situation. But it’s worth emphasizing, that these invisible efficiency improvements will probably consume a lion’s share of IT budgets in the struggle for profitability.

→ Let’s explore Cloud lift and shift – to migrate or to transformate?

Low interest rates

Low interest rates are going to stay for longer than bank owners wish, which will continue to impact the profitability of many of their products. This time more patience is needed along with the hope that interest rates will go back to the pre-pandemic levels.

Loan related risks

Loan losses in addition to the customers’ financial problems were very visible, but they were more limited than anticipated at the beginning of the pandemic. That was one of the major fears but it turned out to be a better situation than predicted . . . which means more money to invest in digitalization.


Cybersecurity is still an issue that needs to be addressed, especially when almost everything is done digitally and most consumer related processes are done online. Investments in security automation and Security Operation Centers, as well as embracing new trends, such as DevSecOps, are to be continued and increased.

Big tech threat

Banks feel threatened by the large tech companies, like Google, Apple and Amazon, with their superior digital capabilities and vast client bases. The response to this feeling is accelerated digitalization in order to try to deliver great customer experiences, using to their advantage the trust relationship they’ve built with the customers. “Working for Google” is an option for banks but the risk of cannibalization is so high that they’d rather compete valiantly than give up.

Also, banks can play their “privacy” and data protection cards as they have better track records than most tech giants.

Fintechs as partners

It has become a new standard for banks to work with FinTechs. Before they were considered a major threat to the bank’s business models, a kind of uberization of banking. Now, as many as half of the banks have partnerships with FinTechs to combine the best of both worlds. This is making banks more lean and digital, and FinTechs more trustworthy and resilient. These are the things that customers welcome with open arms.

→ Explore why Digital Financial Economy Needs Open Banking to Succeed

Another trend is that banks prefer a lower number of partnerships, so only the strongest FinTechs have a chance to be connected to the banks. Results of the collaboration vary in different business areas and in some cases there’s a very low positive impact, but others benefit in visible ways (i.e., loan digitalization, deposit digitalization, increased volumes for loans and deposits).

→ There is more on InsurTech trends 2021

Fintechs are also expected to improve the experience in digital account opening, fraud detection and management, data breach detection and mobile wallets.


Currently, the heaviest technology focus is on cloud computing, APIs, automation and machine learning. None of the technology areas comes as a surprise.

→ Explore API marketplaces for enterprises

Key success factors

The most important factors are the speed of delivery, the efficiency of integration between systems, and the customization of software solutions.

Cost is always important, but now it is further down on the priorities list, as creating worse solutions later is definitely not an option in this extremely competitive market.

Our whitepaper about Digital transformation in Finance is free to download.

Hopes and plans for the future

What can be quite surprising is that one third of the banks haven’t even launched their digitalization strategies yet (Cornerstone Advisors report), and 12% are not even planning to do so. This means there’s a lot of work that can be done even in initial phases, because the other banks are not sleeping and they continue to achieve their digital agility levels.

Digital transformation is expected to improve not only customer service and the efficiency of business processes, but it is also focused on the IT departments which have become internal software houses and have stopped resembling even the traditional IT from just five years ago.

Internal applications are becoming digital products which work for both internal and external users, along with business partners who are using APIs.

→ Read more about New trend for enterprises: Managing the internal platforms as products

What makes us happy at Avenga is that the banks themselves openly admit that trusted agile technology partners are one of the crucial elements that facilitate a faster transformation into digital banking that is powerful and dynamic.

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