By Victor AGBEVE
As we witness an era in which the smartphone replaces the bank teller, an algorithm predicts client financial needs before they state them, and transactional space transcends location via technology, the banking industry can see the potential for transformation.
FinTech has done more than just usher banking into the digital era; it has shifted how banks think about, design and deliver services to a more technology-focused consumer. This shift invites the need for answers to broad, uncomplicated questions: How has FinTech changed expectations for customers?
How has it affected service quality, access and customer satisfaction? Most importantly, how are banking organisations adapting to the new reality in which customer loyalty is dictated by clicks instead of years of loyalty?
The banking experience of 2025 is an entirely different world than even a decade ago. What were once mobile applications that served as an alternative to a physical bank branch have become the first banking experience of millions.
Artificial Intelligence informs personalized financial advice that would once be delivered by a person, and blockchain will reshape how customers view trust and security when completing financial transactions.
This article explores the multifaceted impact of FinTech innovations on customer satisfaction and service delivery in the banking sector.
We review recent research and case studies from 2020–2025, market trends as well as interviews and summarize how these technology advances due to FinTech have changed the way banks are regulated, how customer needs and expectations have changed, the competitive environment the banking sector operates in, and how human organizations and connections within the bigger context of technology can be lost and intangible in the chaotic world of financial services.
The Evolution of Banking Service Delivery
From Physical to Digital: Transforming Customer Touchpoints
The previous customer delivery experience in banking (the physical branch model) has undergone a drastic transformation.
A recent study by McKinsey & Company (2023) indicates that in-person branches accounted for only 43% and 15% of a customer experience in 2020 and 2023 respectively, as a direct result of the COVID-19 pandemic.
Mobile banking applications no more serve as simple access devices for checking balances, but have embraced their own bank access as a component of a budgeting management style.
In the Federal Reserve’s Survey of Household Economics and Decisionmaking, 76% of adult Americans in January 2022 admitted to using a mobile banking application in 2022. In January 2017, only 43% of American adults used a mobile banking application.
As mentioned by Dr. Jennifer Rodgers, Financial Technology researcher at MIT (2024), “We have seen more change in banking technology in the past 5 years, than the 20 prior.” Moreover, she continued, “What we are seeing is not digitizing the previous way of banking — we are seeing a complete reimagining of the customer bank experience.”
AI-Powered Banking Services
AI has changed the way banking services are delivered. Business Insider Intelligence (2024) reported that larger banks (with assets greater than US$100 billion) adopted AI solutions 79% of the time to provide better customer service and operational efficiency. These AI solutions come in three distinct forms:
Conversational Banking: The major banks report that chatbots or virtual assistants answer approximately 45% of all customer requests. (Juniper Research, 2023.) These AI solutions operate 24-7, they can respond immediately to account inquiries, assist with routine transactions, or even provide basic transactional advice.
Personalized Financial Insights: AI algorithms evaluate your spending patterns, income flows and financial behaviors to generate customized recommendations.
Accenture’s research report (2022) indicated that customers who received personalized financial insights were 2.3 times more likely to take action on savings recommendations than customer receiving generic financial advice.
Automated Decision-Making: The use of AI systems has increased exponentially for real-time decision-making in loan approvals, credit limit increases, and fraud detection. AI-powered credit decision systems, on average reduced loan approval times by 73%.
Open Banking and API Ecosystems
Open banking, which allows third-party financial service providers to access banking data via APIs (application programming interfaces), has transformed how services are delivered. The Open Banking Implementation Entity (2024) reported that more than 7 million UK consumers and businesses are using open banking-enabled products, an increase of over 500% since 2020.
“Open banking has changed the way we think about financial services,” says Sarah Chen, Chief Digital Officer at HSBC Asia Pacific (2023). “Banks are now platforms for broader ecosystems of services, rather than just providers of financial products.”
Impact on Customer Satisfaction
Measuring FinTech’s Influence on Banking Satisfaction
There are numerous studies that find connections between FinTech utilization and customer satisfaction. In the J.D. Power U.S. Retail Banking Satisfaction Study (2024), banks with the best digital experience capabilities had satisfaction scores that were 23% higher than the industry average.
Research from the International Journal of Bank Marketing (Wilson & Thompson, 2022) provided five dimensions that FinTech employs to improve customer satisfaction:
- Convenience and Accessibility – 24/7 service that does not depend on location
- Transaction Speed – reduced times for payments, transfers and applications
- Personalization – customized experiences tailored to customer-specific financial behaviours and needs
- Transparency – more visibility into fees, rates and financial position
- Control – more ways for customers to manage their financial lives on their own.
Generational Differences in FinTech Satisfaction
The customer satisfaction level, with FinTech innovations, has a lot of variation across demographic categories.
For example, Forrester’s Banking Customer Experience Index (2023) found that millennials and Gen Z customers care about digital capabilities in a way that is approximately 2.5 times more important than baby boomers when rating their banking satisfaction ratings.
In the American Bankers Association Consumer Banking Preferences Survey (2023), 93% of respondents ages 18-34 indicated mobile banking capabilities were “very important” to their banking relationship, while 67% of respondents contacts 55 and older indicated mobile banking capabilities were “very important.”
The Paradox of Choice and Digital Fatigue
In spite of increases in satisfaction overall, some research suggests that FinTech innovations may also create additional obstacles.
A study in the Journal of Financial Services Marketing (Rahman & Chen, 2023) proposed the idea of “banking app fatigue,” describing the cognitive overload of consumers using multiple financial applications and digital interfaces.
The Human Element in Digital Banking
Although technologies continue to improve, human engagement continues to be pivotal in solving complex financial issues.
For example, in PwC’s Future of Banking Survey (2023), 71% of consumers carefully considered major financial decisions (such as mortgages, retirement, and investment planning) and preferences led customers to prefer human involvement as compared to financial interactions via digital banking channels.
“The most successful financial institutions do not see technology as supplanting human interaction, but rather as an enabler of more profound human connections,” states Financial Services Consultant Maria Vasquez (2024).
Service Delivery Innovations
Frictionless Banking Experiences
The banking innovation challenge of achieving seamless banking, where customer effort is minimized in every interaction with a financial institution, has driven substantial service delivery innovations.
According to Capgemini’s World Retail Banking Report (2024), minimizing friction is highly correlated with customer satisfaction and retention. Banks that had received ‘low friction’ ratings had 27% higher retention than banks given low-fraud ratings.
There are many actionable examples of seamless banking innovation:
- Biometric Authentication: In today’s banking environment the cumbersome password system is being challenged by biometric systems. HSBC’s biometric authentication system reduced login times by 81% and decreased customer service calls due to authentication issues by 37% (HSBC Digital Banking Report, 2023).
- Invisible Payments: Linking banking systems with IoT devices and digital spaces has given way to invisible payments where the payment does not need to be explicitly authorized for each transaction.
- Embedded Finance: Banking services are increasingly being embedded in non-financial applications and platforms. For example, the embedded finance market in 2023 was $138 Billion and projected to have a compound annual growth rate of 26.3% since 2020 (Finextra Research, 2024).
Hyper-Personalization Through Data Analytics
The advancement of data analytics opens up levels of personalization in service that we have never seen before. Boston Consulting Group (2023) found that banks that had employed advanced personalization strategies saw revenue increases of 6 to 8% while also decreasing customer acquisition cost by 10-15%.
Modern-day personalization is more than a valued customer being addressed as such. New personalization consists of:
- Predictive Needs Assessment: TD Bank’s “TD Helps” initiative employs machine learning to identify financial needs based on life events and transaction behaviour, and alerts the financial institution proactively prior to the customer observing the need for service.
- Contextual Banking: Systems where the financial service is delivered within a user’s geographic context and linked to other lifestyle applications.
- Behavioural Banking: Systems that adjust to individual financial behaviours and predispositions.
Blockchain and Distributed Ledger Technology
Blockchain applications in banking have evolved from experimental phases to delivering demonstrable service improvements.
The recent Deloitte Global Blockchain Survey (2024), noted that 91% of banking executives agree that blockchain and distributed ledger technologies have moved beyond trial capability into a stage of practical application for financial services, expanding significantly from 53% in 2020.
Examples of significant blockchain implementations include:
- Cross-Border Payments: Ripple’s RippleNet has been adopted by over 300 banks and financial institutions around the world for international money movement.
- Smart Contracts: Smart contracts are automated self-executing contracts in which the terms of the agreement are directly written into code.
- Digital Identity Verification: Blockchain-based identity systems increase security and eliminate the manual compliance steps for onboarding customers.
Challenges and Limitations
Digital Inclusion and Access Gaps
While technology has advanced, much of the banking customer base remains underserved and out of reach for the benefits of developed digital innovations, or face increasing issues with accessing existing bank services.
The World Bank Global Findex Database (2023), noted while global ownership of accounts is now slightly over three-quarters (76%) of the adult population globally – there remains a digital divide when isolating the accounts owned in poorer/rural populations and among elderly and low-income consumers.
The Federal Deposit Insurance Corporation (2023) recently established that up to roughly 22 percent of all U.S. households remain “unbanked”, or “underbanked” with minimal service options to digital financial services.
Security Concerns and Trust Barriers
Cybersecurity risks are becoming more and more sophisticated alongside technology. The Financial Crimes Enforcement Network (2024) noted a 78% increase in attempted digital banking fraud between 2020 and 2023, with synthetic identity fraud and account takeover attacks growing at alarming rates.
For consumers, apprehension about digital banking security remains a major adoption barrier. The Banking Security Confidence Index by KPMG (2023) found that 64% of consumers have concerns about the security of mobile banking applications.
Regulatory Challenges and Compliance Complexity
The regulatory landscape for FinTech innovation is still changing and evolving in different ways across different jurisdictions.
The Cambridge Centre for Alternative Finance (2023) found that the single most common challenge cited by 68% of financial institutions who are adopting innovative FinTech solutions was regulatory uncertainty.
Strategic Responses from Financial Institutions
Hybrid Service Models: Balancing Digital and Human Interaction
Instead of ideating entirely around digital, many winning institutions have developed hybrid strategies that leverage the efficiency of technology with the expertise of humans.
According to Accenture’s Banking Technology Vision (2023), 78% of banks with best-in-class customer satisfaction scores employ hybrid service models that are intentionally designed.
“The future will neither be digital nor human, it will be the digital & human working together,” says Banking Strategist Rachel Morgan (2024). “The point is determining which combination, or channel, best serves the customer and identify ways to move seamlessly back and forth.”
Strategic Partnerships and Banking Ecosystems
Instead of only viewing FinTech companies as competitors, established banks are increasingly creating strategic partnerships with them. According to The Financial Brand’s recent Digital Banking Report (2023), in 2020, 83% of banks with $10 billion or more in assets had at least three active partnerships with FinTech companies compared to 47% of banks in 2020.
“Most innovative banks realize they cannot continue to hold competitive advantage on all technology fronts at once,” says Banking Innovation Consultant David Pearson (2023). “Strategic partnerships create specialization and excellence while keeping the relationship with the customer.”
Cultural Transformation and Talent Development
Seamlessly integrating FinTech requires an organizational change that goes way beyond just implementing technology. Banks that have achieved a high level of organizational agility are 3.2 times more likely to successfully implement technological solutions than banks that have traditionally organized themselves (McKinsey’s Financial Services Agility Index, 2024).
Conclusion: The Future of Banking Experience
The introduction of FinTech into banking applications has fundamentally changed customer expectations, market competition, and operational models. The rapid change initiated by these applications is still growing and there will be some trends that will impact future banking:
- Ambient Banking: Financial services that align with customer needs and respond quietly into the environment, not separately provided and in view to the customer.
- Hyper-Personalization at Scale: Enhanced AI capabilities will allow for deeper layers of personalization at scale without a comparable increase of cost.
- Ethical AI Governance: There will be an increasing focus on transparency, equity, and explainability of automated systems.
- Green FinTech: There will be hybrid behaviors of accounting for and enabling sustainability into banking technology.
- Quantum Finance: There will be an early look at quantum computing for risk modeling, portfolio optimization and fraud detection.
Despite all the fast changes to technology, the purpose of banking remains unchanged – facilitating security and growth. The most successful institutions view technology as value-adding to those purposes and never as the purpose.
As the Chief Digital Officer at Standard Chartered said at the 2024 Global Banking Technology Summit: “Banking has always been about trust. What is changing is not the importance of trust, but the way trust is created: through digital excellence, helpful insight and human wisdom supported by technology not supplanted by it.”
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Victor is a Former Banker | Graduate Research Fellow, W. P. Carey School of Business, Arizona State University
