With the advancement in modern technologies, like AI, Cloud, robotics, APIs, and cybersecurity, financial institutions tend to obtain multiple opportunities of introducing new products and services, improving customer experience, and achieving efficiencies effortlessly.
Moreover, consumers are also turning their attention towards fintech solutions and big tech platforms to leverage the benefits of essential financial services like deposits, loans, payments, and investments. Hence, developing and deploying new digital services like ACH Transfer vs Wire Transfer, building new business models, and adopting a customer-centric approach become relatively significant.
Based on the above information, we have created an article that focuses on the future technological trends of banking institutions.
Tech Trends For Banking Institutions
Banking-As-A-Service (BaaS)
Traditional banks are feeling pressurized by Big Tech and noebanks since they have integrated a seamless and user-friendly customer digital experience. This challenge derives a trend of changing the customer experience among them. They are adopting Banking-as-a-Service to reshape the entire retail banking business.
BaaS is often considered an API strategy that constitutes open banking. It is a collaborative model in which all the banking information is shared with third parties. It helps them in delivering enhanced capabilities and services in the marketplace.
A Move To Cloud
The majority of banking and financial institutions are using cloud computing solutions as their core system. They are doing so to store and secure data and support applied analytics. This way, there has been an increase in customer insights, improved efficiency, enhanced innovation, greater agility, and a reduced risk of security and business continuity breaches.
Moreover, being an overarching organizational advantage, cloud computing is augmenting human productivity, thereby providing insights that benefit both the front and the back-office transformation.
ML Model: Industrialized AI
For a long time, banks have been highly reliable in data analytics. However, by using ML technologies, they tend to step up their game radically. This model helps the banking solutions in obtaining near-real-time processing of data. It helps them to efficiently discover patterns, reveals anomalies, generates insights, moves toward automated decision making, and makes predictions.
Blockchain
Blockchain is one of the most significant technological breakthroughs in these institutions. It is a system that helps in recording information in a way that makes the process of changing, hacking, and cheating impossible. It does so by providing a ledger that cannot be administered by any people and is highly effective in financial services like real-time payments and securitization. According to some analysts, blockchain technology is capable of reducing risks and saving a large amount of money.
Intelligent Process Automation
When next-level process automation and virtualization become common, all the existing work activities are also automated. This way, there is a significant rise in the opportunities for greater efficiencies and enhanced data for improved decisions. Tools that include Robotic Process Automation (RPA) and Digital Process Automation will continuously grow as it is capable of providing benefits beyond improved efficiencies to the financial institutions.
Banking institutions have also realized that they cannot deliver an excellent digital customer experience without a digital-first back-office. Therefore, there will be a more efficient account opening process, customer onboarding, and digital loan application management.
Quantum Computing
Several banks are leveraging the benefit of a quantum computing to crunch substantial amounts of data at a superfast speed. One of the highest-rated banks in the world, Caixa Bank integrated quantum computing strategy and also developed a machine-learning algorithm to categorize customers based on their credit risk. By doing so, they became the world’s first bank to incorporate this technology into their system in 2020.
Video Tech
The traditional way of doing business was challenged by the pressure of digital disruption and innovation. This is when banks realized the potentiality of video collaboration technologies. They witnessed the benefits of accelerating decision making, improving productivity, boosting product innovation, and improving the customer experience.
However, there are some risks as well. This includes a reduction in video and voice communication surveillance as everyone was using Zoom and other platforms.
Conclusion
These are some of the technological trends that are crucial for banks to move forward in the digital age. However, implementing them requires some effort on the level of technology, process, and automation. So, implement it according to the needs of the customers.
