The two main pillars of modern banking development have been information technology and electronic funds transfer systems. Now the scope of financial technology (fintech) is extending to messaging technology for marketing financial services, 24/7 virtual assistants, mobile apps, voice banking, social media integration tools, and more. Therefore, banks need to adopt a transformative strategy to tackle these new digital challenges.
Competition from fintech firms and increased expectations from the consumer are forcing banks to initiate an effective strategy to invest in digitizing processes with the latest technologies to reduce costs and improve customer service. Let’s have a look at following new-age technology trends, cutting edge technological capabilities banking sector can leverage to accomplish their digital transformation towards more connected, expansive, and modern banking.
1. Blockchain
Used widely by cryptocurrencies, blockchain technology is a distributed database that can keep track of transactions in a verifiable and permanent way. It enables banks to process payments faster and more accurately, while simultaneously reducing transaction processing costs and creating new products and services, which can generate new revenue streams. However, banking sector needs to have the prerequisites, such as a well-developed infrastructure, to capitalize on this transformative technology.
According to a report by Accenture, 90% of banks surveyed reported that they are exploring blockchain in conjunction with payments, 30% claimed to have some production implementation already in place, while another 30% said they are involved in proofs-of-concept (POCs).
All the banks need to come together and collaborate to turn blockchain’s potential into reality. A global network is critical to help banks use blockchain to help transform payments at scale and to help reduce the risk of failure.
2. Artificial Intelligence, Machine Learning, and Cognitive Technologies
Hyper-personalization, driven by artificial intelligence (AI) and cognitive technologies, can enable banks to treat customers in an individual context. Chatbots and robots are the most visible ways that banks use AI. AI is currently used by a significant number of banks to streamline customer service.
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These state-of-the-art technologies have also facilitated mobile banking, which has enhanced security, and provided a fraud detection system, helped with risk management and lending decisions, and has made it easier for customers to conduct banking operations. AI-driven analytics provide end-to-end analytical support—making processes smarter and empowering knowledge workers.
3. Digital Sensing
Potential customers communicate through many different channels. But these opportunities are hard to grasp amidst the noise of social media. In the increasingly competitive banking sector, banks’ processes must be intelligent enough to reach out to these potential customers with contextual responses.
Digital sensing has the capability to listen to customers across channels, discover context, and initiate the appropriate processes to detect business opportunities and in turn make the most of the discovered opportunities.
4. Robotic Process Automation (RPA)
Robotic process automation (RPA) is a technology that mimics the actions of a human performing simple, rule-based processes. It enables robots and virtual assistants to complete repetitive and labor-intensive tasks seamlessly without human intervention. Banking sector needs to leverage the potential of RPA technology as it can reduce expended labor, operational costs, and errors, all while creating a phenomenal customer experience.
With RPA, banks can reduce turnaround time and ensure consistent and responsive service to customers, especially since the automation of repetitive, mundane tasks frees up knowledge workers and enables them to focus on high value and important tasks. By selectively automating mundane portions of processes, customer representatives can focus on customers’ needs. RPA technology also ensures compliance in the highly regulated banking sector.
5. Cloud Computing
Cloud computing is a technology for storing data and delivering computing services over the internet, It poses several opportunities and benefits for the banking and financial sector. For instance, storing, managing, and accessing the information via the cloud has made things easier for bankers as well as consumers. Cloud computing makes around the clock customer service possible from anywhere, and it makes scaling-up services easier and faster.
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Banks only pay for the services they actively use on the cloud—this model can help them bring down costs. Cloud computing has increased the turnover of banks by providing cost-effective cloud solutions. It ensures smooth transactions and good customer experiences in banks by ensuring secure online payments. Software technology companies are offering their solutions for banks, such as account opening, loan origination, etc., on both private and public cloud and often extend support for hybrid models.
The Road Ahead
Customers are demanding more transparency and convenience when it comes to managing their money. Technologies like AI and ML offer personalized engagement between banks and their customers by dealing with each customer individually and focusing on their requirements. Banking in the future will be collaborative and will raise the bar in setting new standards for customer service, compliance, and innovation.
In this highly competitive industry, banking institutions of all sizes should keep an eye on the latest innovations and technology trends impacting the industry and begin to think about how best to integrate these cutting-edge technologies into their operations.
