The unprecedented amount of disruption in the banking industry is happening across every market, every distribution channel and every single product line that is currently active in this segment, which is something that is changing the very core of the banking business model. The appearance and fast proliferation of low-cost FinTech competitors poses a potentially fatal risk that will bring traditional banks\u2019 IT systems and ecosystems to their limit, as well as their skill to ability to rapidly respond to the increasingly changing consumer expectations.\nThe time to debate if the rising FinTech startups could generate any real traction is now gone and conversations should focus on how fast and how far transactional banking will be unbundled and margins decreased. The question traditional financial institutions are asking in what is the best action to be taken, and even there are a number of strategic options and potential responses, the right path is still not clear yet, as some of the largest banks are developing their own technological solutions in-house, others are acquiring FinTech startups.\nOn the outside, banking providers are partnering with FinTech players and open up their platforms to grant third parties access to their customers, two strategic actions that are gaining ground.\nBanks are now facing different challenges in the digital age that has been pointed out by many researches and market experts. Among these challenges, it is possible to highlight some of the most impacting ones:\n\nAccording to Gartner and IDC, by 2018, banks and financial institutions clients will access and contact their banks mainly through mobile devices;\nBanks and financial institutions CIOs main concern to 2017 and beyond is what will be done with their companies\u2019 branches;\nAccording to the 2016 MX Consumer Survey, clients find it more important an easy digital banking experience (67 percent) rather than a friendly teller or staff (33 percent) when choosing where to open an account;\nAccording to the 2016 MX Consumer Survey, banks and financial Institutions clients are now more likely to access their banks in a more impersonal way, and only 19 percent use a personal method (branch or call center), as shown on the chart below:\n MX Consumer Survey\n\n\nCurrently, the number of strategic challenges facing the banking industry may seem quite overwhelming, and prioritizing what needs to be focused on is an important and vital exercise for CIOs and other IT executives working within this market. According to the 2017 Digital Banking Report, the top three priorities that were mentioned were improving the digital experience, which was mentioned by 71 percent of the respondents, enhancing data analytic capabilities, mentioned by 50 percent of the respondents, and finding ways to reduce costs, mentioned by 41 percent of the respondents, and the rest of the priorities mentioned were at least 15% less likely to be mentioned. Interestingly, despite a great deal of coverage in industry publications, the desire to partner or invest in FinTech relationships is a low priority for all but the largest organizations. The chart below shows how banking IT executives listed their 3 main priorities for 2017:\n Digital Banking Report\nThese results are not too surprising, giving the current market situation, but a closer look on the 3 main priorities that were highlighted in this survey may be important to understand how digital banking trends will rise and how the current digital banking state will evolve.\nImproving or enhancing digital experience\n\u00a0Consumers are increasingly making decisions based on how easy it is to interact with their financial institution, and the growing competition around the customer experience is creating new roles and titles within the banking industry. The challenge has been that, while a majority of financial services firms are in the process of expanding their customer experience projects, especially as it relates to both digital and mobile engagement, there is still difficulty in gaining resources to pursue new projects and, in order to apply resources towards improving the customer experience, banks and financial institutions will need to design KPIs and other metrics to properly measure success.\nCurrently, there is a wide variance in methods and metrics that are being used around satisfaction, retention, loyalty, engagement and, in some cases, around revenue. Improving the customer experience was the most consistent in level of mentions across asset categories, type of organization and location in the survey, and this is surely going to be on the spotlight for a while, once banks and financial institutions must move from a transaction management business model to a relationship management business model.\nEnhance data analytics capabilities\nEvery trend for banking for the upcoming years is virtually putting customer insights, information and data analytics at its foundation, from making the customer journey frictionless, to improving multichannel delivery and exploring the use of open APIs, data is the fuel that will power these initiatives. Banks and financial institutions have plenty of information and data available, still most organizations are having a hard time understanding and defining the data will effectively have an impact and how to harness the full potential of insight collected, and some of the reasons for falling short of potential include:\n\nCompeting priorities: Within the financial services sector, as time goes by, due to the amount of priorities, many may change very rapidly and suddenly.\nTechnology complexity. Financial institutions and banks very rarely use the full potential of their available data due to their multilayered systems and data segregated in silos.\nLack of internal collaboration. The lack of interaction between the different areas of financial institutions can result in a poor allocation of human, financial and technical resources, as well as restrict exchange of ideas.\n\nThe issues in neglecting the data financial institutions and banks have creates the risk of falling behind in leveraging consumer insights, once consumer expectations are rising and the great majority of these are being set by non-financial competitors.\nReducing operating costs\nMany financial institutions and banks are now more concerned and paying more attention to their operating costs due to the recent reduction on interest rates and operating margins, causing a massive time and effort spent to cut costs wherever possible, and in some occasions, these efforts have been done without understanding the impact on the customer experience or without fixing underlying process flaws.\nWhenever installing new digital banking technology (in the interest of reducing costs or more operational efficiency), it doesn\u2019t help much unless the routine processes that are being automated are first closely examined and streamlined applying some of the principles of industrialization and efficiency management to processes and operations. If the financial institution or the bank does it without a proper review and improving of underlying processes, any digital banking initiative will fall short of full optimization and, at worst, simply automate already dysfunctional processes.\nThe future of banking itself in the digital age is a complicated subject to be discussed given the way it has been disrupted in the past few years. Many banking executives expect the landscape to be shaped strongly by both technology and non-traditional competitors, retail banking will be fully automated and more money will flow through FinTech firms than traditional retail institutions. That makes very clear the problem with innovation within financial industry: it can be quite unpredictable in terms of timing, scale and consequences.\nWhen it comes to the digitization process of banking, it is necessary to understand that it is driving a huge transformation and rewriting its business model as consumer expectations change. For the first time ever, the importance of branches and human interaction became open to debate if necessary and many traditional banking providers are now reformulating their market and operational strategies to survive and remain at the center of consumers\u2019 financial lives by shifting from transaction centers to a valuable financial advisory services.