The younger generation of consumers, who are and will make up the future workforce, has grown up within the peripheries of a digital world. For a population group whose daily lives are dictated by their mobile device, their needs too are different. These customers are not satisfied with less and are prone to switch at the next best offering.
It should come as no surprise that their demands from banking technology continues to fuel the tech innovations from the small fintech and challenger banks to the biggest players in tech joining the fight to win them over. This rising competition means the traditional bank faces a fight to remain relevant to younger consumers in several key areas: innovation, service, and reliability. Read on to know how these technologies are evolving to meet the needs of a demanding global population.
Automated Financial Services Employees
A great percent of banking jobs could disappear within the next five years due to developments in technology. Still reeling from the last recession and from the post COVID-19, economy firms are already having to adapt or look for other positions due to the use of technologies such as machine learning and cloud computing, which automate their operations according to prominent news sources.
Banks are adapting with technology to allow them to deliver a faster, more transparent experience to consumers. A large portion of their resources, however, is necessarily dedicated to industry-specific requirements and has allowed non-banks or financial service providers that are not regulated by the banking industry to flourish since the 2008 recession. Since these companies can devote a greater percentage of their assets to cutting-edge financial technology, they might be able to innovate more rapidly than traditional banks, attracting tech-savvy customers in the process.
The in-bank experience of the future might be more like going to a brand store of a tech company like Apple or Samsung. As more people now can download user-friendly banking apps or easily find an ATM to handle basic banking transactions, the typical in-bank customer today is seeking help involving a personal interaction. Banks hoping to increase sales in the future are considering this transformation as a way for customers to interact more directly with the bank and its products, directing customers to get their work done with tech kiosks for some. Person-to-person interaction for answering questions or addressing needs unique to the individual consumer can be reserved as priority services.
Open Banking & Beyond
Open banking permits third-party financial services to access user data (with their consent) on banking, transactions, and other financial activities through consumer activity shared through application programming interfaces (APIs). This information can come from banks and other financial institutions and allows for data sharing making open banking ideal to drive serious innovation in the banking industry such as allowing third-party providers to create tailor-made services that best fit their customers’ requirements. Therefore, open banking holds promise to reinvent the competitive banking landscape by supporting exceptional customer experience.
With individual inputs, third-party financial services will be able to use the customer’s banking activity to better highlight individual financial service options, utilize aggregated data making separate marketing segments, assist consumers switch from one financial institution’s account to another, etc.
Nevertheless, with so much consumer data flowing between different actors via open banking, it’s vital that banks, fintechs, financial institutions, and third-parties adopt open banking and do so with cybersecurity clearly on the agenda.
Hackers and fraudsters are also getting smarter at exploiting customers through newer scams. This means that banks need to constantly innovate to improve the security of their online banking systems and apps.
With any digital product there will always be risks in sharing personal information. People trust platforms even with these risks in mind. It’s vital that in the case of open banking both consumers and banks educate themselves and create the necessary frameworks to promote security and safety while sharing data.
As a result, the role of cybersecurity solution providers will become integral in the years to come and will be a necessary complement of any banking or financial service offering, especially in the case of open banking.
Blockchain and the DLT Disruption
The $5 trillion traditional banking has much to apprehend if it cannot embrace Blockchain and Distributed Ledger Technologies (DLT). Blockchain technology essentially proliferates a means for untrusted parties to come to an agreement on the state of a database without the need for any middlemen. As such, through the provision of a ledger that is administered by no central authority, a blockchain can offer financial services with the involvement of the traditional brick and mortar banking institution itself!
Blockchain can make the requirement for gatekeepers vanish in the loan and credit industry and enable more secure borrowing with lower interest rates.
Moreover, self-executing “smart contracts” based on the blockchain can potentially automate manual processes such as compliance, claims processing, distributing will contents, etc. Paper-heavy bills of lading process in the trade finance industry can become a thing of the past as blockchain technology can build more clarity, safety, and confidence among trade parties internationally. It is a positive sign to note that Prime Bank has become the first Bangladeshi Bank to execute an interbank blockchain digital Letter of Credit (LC) transaction. The transaction was conducted with HSBC through Contour and made Prime Bank the first bank in Bangladesh to conclude cross border trade transactions through the network.
Additionally, with a decentralized ledger for payments such as cryptocurrency, blockchain technology has the potential to accelerate payment provision at lower fees than traditional banks.
Placing tokenized traditional securities on public blockchain securities such as stocks, bonds, and alternative assets has the ability to give birth to efficient capital markets.
Additionally, DLT can assist in ensuring improved governance and benchmarks in the context of data sharing and other forms of collaboration. By storing customer information on decentralized blocks, the pathway to an easier and more secure way to share information between financial institutions can open up. Essentially DLT can decrease operational costs to move us closer to real-time transactions between different financial institutions.
Since their introduction in 1967, ATMs transformed the bank tech system. Contactless payments are likely the next revolution in the next generations of ATMs. Similar to the services provided by Apply and Google, carrying out contactless ATM transactions using your smartphone may just be the next frontier. Biometric authentication and iris recognition are some steps banks are already initiating worldwide for greater security of clients.
Way Ahead with Wearables
According to Samsung Insights, smartwatches and other wearables are on the path to becoming the future of the retail banking experience. Personal greetings and mobile payments can also be proliferated with this technology.
Smart glasses can also be shared with employees to identify individual customers and speed up the service delivery process while the employee works on special tasks.
Moving Ahead with Mobile Banking
The mobile and digital transformation in the banking system has only just begun and growth is already explosive. Banks are investing heavily in digital banking technology, in which customers use mobile, web or digital platforms to use banking services. Artificial intelligence solutions, such as chatbots, often assist customers in simple tasks such as making payments. Organizations like Eastern Bank Limited have already incorporated chatbots and other Banks and Mobile Financial Service companies are following suit.
Although banks can pour lots of money into technology, the fastest way to deliver financial innovation in the future is likely going to involve strategic partnerships. Fast-growing companies that already have new-wave fintech or social media platforms in place could make excellent partners for traditional banks seeking to enhance customer experience. Card-linked marketing company Cardlytics, which engages in data analytics, is partnering with several financial institutions like Bank of America to leverage secure purchase data in order to tailor marketing based on consumers’ card use.
It is quintessential banks merge cutting-edge technology with their own data to give consumers a full glance at their finance. Automated notifications, budgeting suggestions, loans, merchant partnerships are just a few of the options of experiences that the modern customer is looking. Moreover, budgeting and savings recommendations as well as access offering access to other financial and non-financial products can be additions to the customer experience. Essentially the move may come from cash to a digital transaction medium.
In summary, consumer behavior, Fintech, blockchain and smart device trends are directing banking technology developments in favor of the customer’s convenience. These increasing number of remote innovations will enable you to interact with your bank right from your fingertips. The whole customer journey is on the verge of being redefined. Sit back, relax and take control of your finances.