The traditional banking model was already being challenged pre-COVID-19 by three trends: persistently low interest rates, extended regulation and increased competition from challenger banks and digital entrants. COVID-19 has accelerated the need for new banking technologies and cost-cutting efficiencies. Cloud technologies, digital applications and AI can help banks weather these changes and differentiate their offerings in the long term.

This shift also reflected a practical need for more efficient operations as well as increasing pressures for banks to boost their return on capital and decrease cost-income ratios. Meanwhile, systems such as Open Banking (allowing third party applications access to bank accounts) was a potential disruption to the industry, splitting the value chain into product creation and fulfilment and increasing the likelihood of competition from new entrants, particularly from big technology firms.

COVID-19 is accelerating these demands. It has also changed consumers' behaviors, pushing them to consider new tools and technologies. As customers become "digital first" across all age groups the traditional banking model of separate and often unintegrated channels comes into question.

Our research suggests there are three trends which will shape the future of the banking industry:

1. New technologies will drive banking transformation over the next 5 years. Cloud and SaaS has allowed banks to operate with an agility and speed usually associated with their fintech competitors.

2. Artificial intelligence will separate the winners from the losers in banking. There are a diverse range of uses for AI, with a growing focus on improving the customer experience through personalization.

3. Banks will overhaul their business models to create digital ecosystems. In the new world, banking will become part of a platform of services with the key players transforming their business models into digital ecosystems and making the bank the center of these platforms.

In the near term, banks may enjoy a revitalization as they continue lending to their customers during the crisis. They also enjoy the protection of the safety net and access to deposit financing. Nevertheless, COVID-19 will likely accelerate the digitalization and the shift over the medium term of activities away from the sector. This prompts some fundamental strategic questions:

• Big Tech companies have many of the ingredients to get ahead in the post- COVID-19 world. They are digital natives; they have the technology, customer base and brand recognition, as well as vast amounts of data and deep pockets so how do we protect our customer base from new entrants?

• How do we use open banking to play a wider and more indispensable part in our customers' lives?

• How do we harness the data we have to increase personalization and build longer and more sustainable relationships across the customer lifecycle?

• How do we integrate digital across the retail estate? What is the role of branches in the new reality?

The banking industry was already facing extensive disruption and change. COVID-19 provides a burning platform to reset the role of banking in the mind of the customers and align it with providing solutions not products. Integration, proactivity and purpose are the new watchwords.

For more information, download the full sector PDF

Sector hall of fame based on brands' Customer Experience Excellence performance relative to their market, according to consumers in the market specified.