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The Risk of Over Concentration: Managing Tax and Investment Risks
July 23, 2023
In recent years, the shift towards online banking has beenincreasingly evident, with more and more customers opting for digital bankingservices over traditional brick and mortar banks1. Online banks arebecoming increasingly popular due to their convenience, low fees, andhigh-interest rates. The COVID-19 pandemic has only accelerated this trend, aspeople have become more comfortable with online banking and avoiding in-persontransactions. According to a recent survey, more than one in four people dotheir banking entirely online, and this number is expected to grow in thecoming years2. Thisshift is leaving many to wonder, where is the future of banking headed?
Let's start by looking at the key advantages and differencesbetween traditional and digital banking.
While traditional banking may come with digital options,providing a hybrid experience, the next big transformation in the industry isproving to be the incorporation of artificial intelligence. AI adoption mayseem like an even more dramatic shift away from brick and mortar but inreality, it may allow for an even more personalized relationship between banksand their customers. At a minimum, the ability to automate many routine tasks,such as account balance inquiries and password resets around the clock would freecustomer service representatives up to focus on more complex issues.
Widespread implementation of AI in banking will requiresubstantial focus on safeguarding the security and privacy of customer data,training AI models on the banking industry and ultimately, customer adoption. Whilebrick and mortar banks are not going away anytime soon, the online banking trendis undeniable. It's clear that financial institutions should be focused onincreasing their flexibility and adaptability, and offer a competitive customerexperience for consumers with a wide variety of needs. No matter what type of bankingexperience you're looking for, the option that best fits your needs is outthere!
Sources:
- AARP. "The Vanishing Brick-and-Mortar Bank Branch." https://www.aarp.org/money/investing/info-2021/why-are-bank-branches-closing.html
- GOBankingRates. "The Future of Banking in 2023: Will Online Banking Eliminate Brick-and-Mortars?" https://www.gobankingrates.com/banking/banks/the-future-of-banking-will-online-banking-eliminate-brick-mortars/
- Bankrate. "Digital banking trends in 2023" https://www.bankrate.com/banking/digital-banking-trends-and-statistics/#stats
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About the author
Guest Author
Securities offered through Kestra InvestmentServices, LLC (Kestra IS), member FINRA/SIPC. Investment advisory servicesoffered through Kestra Advisory Services, LLC (Kestra AS), an affiliate ofKestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS.Kestra IS and Kestra AS do not provide tax or legal advice.
Investor Disclosures: https://bit.ly/KF-Disclosures
The opinions expressed in this commentary are those of the author andmay not necessarily reflect those held by Kestra Investment Services, LLC orKestra Advisory Services, LLC. This is for general information only and is notintended to provide specific investment advice or recommendations for anyindividual. It is suggested that you consult your financial professional,attorney, or tax advisor with regard to your individual situation.
