How 2015 is Different for Retail Banks

The retail banking industry has seen major changes occurring in the industry over the last few years with the adoption of mobile banking, the rise to prominence of the millennial demographic, narrowing margins, stagnant top line revenues, the future of the branch and continued regulatory changes. As we begin 2015 in retail banking, here is a quick look at five trends to watch for in 2015.

Digital Banking

The 2014 Federal Reserve report identified that, for the first time, more than 50% of smartphone owners are using mobile banking. Banks continued to invest heavily in this channel to differentiate last year.  The big new feature in 2014 was Apple Pay, which had many banks scrambling to get onboard after the November launch.  Now in 2015, we will see more experimentation in location-based services and loyalty, and reward tie ups with merchants.

Payment disruption and innovation

This year will be huge for payment disruption. The sheer amount of advertising around security features will begin to drive consumers away from plastic and toward mobile-only payments.

Apple Pay opened the door for mobile payments, and continued evolution is certain. Similarly, Merchant Consumer Exchange is due to launch Current C later this year.

The October 2015 Europay, MasterCard and Visa (EMV) deadline looms and many issuers have already begun issuing NFC chip enabled cards. Meanwhile, tokenization is entering the lexicon of everyday vocabulary.  Additionally, we will see the first mobile-only “credit card” issued in 2015.

Branch innovation and branch closings

Banks will continue to spend large sums on “branches of the future,” as they try to find the right formula to capture the digitalization of banking while balancing face-to-face relationship building.

Two major trends are occurring: shrinking branches are being replaced with smaller footprint branches, including branches with cafes and branches in stores that are tapping into location convenience; and larger, showcase “branches of the future” that have a heavy focus on technology including touchscreens, video conferencing and smart ATMs are popping up.  Branch closures will continue to outpace branch openings in 2015.

Cyber vulnerabilities

We learned in 2014 that seemingly everyone was being hacked. From Target and Neiman Marcus to Home Depot, and even standard bearer banks like JP Morgan Chase.  We saw our account information jeopardized due to organized crime outfits while banks scrambled to maintain customer confidence.  Banks, with the support of the government, are spending significant sums to fortify their security.  Look for further security breaches in 2015 and more industry-wide initiatives to protect data.

Omni Channel banking

Even though this was a key topic in 2014, the opportunity for omni channel growth is still very large. Many banks have focused instead on enabling the consumer to have a better experience across a bank’s channels. While this is a good step forward, look for the transformation of the user experience across the transaction channels to begin now that we’re in 2015. Think about the home buying experience and the multiple entities involved in this process, including the bank and the potential new revenue fees that could be developed. Either the banks will step forward with a solution to help customers navigate the home buying process or non-bank entities will step into the fray and create a value proposition.


Bob Graham is a senior member of Virtusa, Banking and Financial Services team. In his current role, Bob is responsible for Strategic Business Development, for expanding Virtusa’s footprint at existing clients and acquiring new banking and financial services relationships through the development and delivery of industry-leading solutions. During his tenure at Virtusa, he has successfully helped leading financial services firms excel in customer acquisition and on-boarding, improving operational efficiency, accelerating time-to-market, millennial enablement, mobile banking, and handling the ever-changing regulatory environment.


Written by Bob Graham