The retail banking industry is on the brink of a significant transformation as it heads into 2025. Capgemini’s latest trends book identifies three core themes fundamental to this transformation: Customer First, Enterprise Management, and Intelligent Industry. These themes illustrate how retail banks are responding to evolving challenges and opportunities, positioning themselves for a customer-centric, efficient, and innovative future.
Retail banks increasingly focus on enhancing customer experiences to foster loyalty and satisfaction. The transition from siloed multichannel approaches to integrated, seamless omnichannel customer interaction strategies is a significant trend. Modern customer journeys involve multiple digital and physical touchpoints, and current operations in many banks create friction. This transition aims to enhance customer experience (CX) and foster greater loyalty by providing consistent and uninterrupted service across all channels. By eliminating the barriers between different communication platforms, banks can ensure that customers receive a smooth, cohesive experience no matter how they choose to interact.
With the increasing prevalence of digital platforms, consumers often face complex financial decisions independently. This trend underscores the need for retail banks to provide financial education, which can help build customer confidence and loyalty while opening opportunities for cross-selling. By offering financial literacy programs, banks can empower customers to make informed decisions, ultimately strengthening their relationship with the bank. Educating customers about various financial products and services not only assists them in navigating their financial lives but also positions the bank as a trusted advisor and partner in their financial journey.
Given the importance of securing long-term customer growth, banks are focusing on engaging younger customers. Strategies include the development of youth banking services and the use of digital banking and educational tools designed to resonate with younger, tech-savvy audiences. By catering to the needs and preferences of younger customers, banks can ensure a steady influx of new clients and foster long-term loyalty. By developing products and services tailored to younger generations, banks can establish early relationships that are likely to evolve into lifelong customer connections.
Streamlining Processes and Increasing Agility
Operational resilience is a priority for retail banks as they navigate the evolving regulatory landscape. The Digital Operational Resilience Act (DORA) mandates that banks and critical third-party providers implement robust IT security measures to avoid reputational damage and regulatory action. Ensuring operational resilience is essential for staying compliant and maintaining customer trust. By investing in advanced security infrastructures and adopting proactive risk management strategies, banks can safeguard their operations against potential threats while ensuring seamless service delivery.
The increasing regulatory burden means higher compliance costs and longer timelines. Banks are expected to invest in RegTech solutions that automate compliance and regulatory reporting. This investment not only enhances resilience but also strengthens competitive edge by freeing up resources for other strategic initiatives. By leveraging RegTech, banks can streamline their compliance processes and focus on innovation and growth. Automating routine compliance tasks allows banks to allocate their human resources to more strategic functions, fostering a culture of innovation and forward-thinking.
In 2025, one of the primary concerns for retail banks is the high cost of capital and declining deposit volumes. To address this, banks plan to focus on new deposit acquisition and reduce funding costs through bundled product offerings. They will also target customer segments with a higher preference for liquid cash. By adopting these strategies, banks can improve their financial stability and ensure a steady flow of deposits. Offering appealing bundled products not only attracts new customers but also enhances the overall value proposition, encouraging existing clients to deepen their relationship with the bank.
Delays in onboarding processes, especially Know Your Customer (KYC) procedures that can take up to three days, are a source of customer dissatisfaction. To combat this, banks are adopting digital identity tools to streamline and improve the accuracy and efficiency of the onboarding process. By enhancing onboarding efficiency, banks can provide a smoother and more satisfying experience for new customers. Implementing advanced digital identity verification methods not only accelerates the onboarding process but also reduces the risk of fraud, thereby boosting customer confidence and overall satisfaction.
Building Digital Experiences and Integrating Modern Solutions
The role of AI in retail banking is evolving. By 2025, the technology is expected to progress from data-driven machine learning to agentic AI, comprising autonomous agents that personalize services and automate operations. This innovation is set to introduce new productivity and efficiency levels, transforming how banks interact with and serve their customers. By leveraging AI, banks can offer more personalized and efficient services, enhancing customer satisfaction. The transition to agentic AI marks a significant shift toward greater automation and tailored customer interactions, allowing banks to meet and exceed customer expectations.
With heightened pressure from investors and regulatory bodies, retail banks need to enhance their Environmental, Social, and Governance (ESG) efforts. Implementing ESG solutions proactively will positively influence bank reputations and establish deeper and more trustworthy relationships with both investors and customers. By prioritizing ESG, banks can demonstrate their commitment to sustainability and social responsibility, attracting more customers and investors. Embracing ESG principles allows banks to align their operations with broader societal goals, thereby enhancing their overall brand value and competitive positioning.
New regulations in open finance offer retail banks the opportunity to gain comprehensive insights into customers’ financial footprints. Real-time access to detailed financial data simplifies integration into a single platform, thereby improving customer convenience, enhancing cross-selling opportunities, and supporting well-informed lending decisions. By leveraging open finance, banks can provide more comprehensive and convenient services to their customers. The capability to access and analyze real-time financial data facilitates more accurate credit evaluations and customized financial solutions, further strengthening customer relationships and driving business growth.
Transformative Expertise of Capgemini
The retail banking industry is poised for a major transformation as it approaches 2025. Capgemini’s latest trends book highlights three key themes driving this change: Customer First, Enterprise Management, and Intelligent Industry. These themes showcase how retail banks are addressing evolving challenges and opportunities to become more customer-centric, efficient, and innovative.
A primary trend is the shift from siloed multichannel to seamless omnichannel strategies, enhancing customer experiences and fostering loyalty. By creating consistent, uninterrupted service across all channels, banks aim to eliminate friction in customer interactions, providing a cohesive experience whether engagement is digital or in-person.
As digital platforms become more prevalent, customers are making complex financial decisions on their own. Retail banks must offer financial education to build confidence and loyalty, while also opening opportunities for cross-selling. Providing financial literacy programs empowers customers, strengthens their relationship with the bank, and positions the institution as a trusted advisor.
To ensure long-term growth, banks are targeting younger customers. By developing youth-oriented banking services and using digital tools that appeal to tech-savvy audiences, banks hope to attract younger clients and foster long-term loyalty. Tailoring products and services for younger generations helps banks establish early and lasting relationships, turning young clients into lifelong customers.
