Technological advances in the banking industry enhance security, improve operational efficiency, and help deliver a superior customer experience. All these things are critical for banks to succeed in these competitive and challenging times.
Artificial intelligence (AI)-backed anti-money laundering (AML) and know-your-customer (KYC) solutions make it possible to screen new clients faster and more accurately. Blockchain-powered smart contracts simplify financial transactions and improve transparency. Cybersecurity solutions help protect customer information and assets.
Banking technology, often referred to as FinTech, changed rapidly during the pandemic and is currently evolving faster than ever before. This guide covers today’s top banking technology trends. Leverage the information to figure out how you can run your banking operation more effectively and efficiently.
AI allows banks to provide top-quality, modern digital banking services, including providing bank accounts, checking accounts, and customer and business loans, while saving on operating costs.
Implementing AI-powered tools, such as virtual assistants and chatbots, automates interactions between customers and banks, delivering a better experience with fewer people. In addition, they provide account information to customers quickly and accurately and help answer questions and resolve issues.
Artificial intelligence-powered biometric tools detect fraud and improve bank security. They also enhance AML applications and KYC checks.
Machine learning (ML) algorithms that take AI to the next level enhance credit score modeling, which helps banks make better personal and business lending decisions. Similarly, AI analyzes massive financial datasets to improve risk assessment and financial forecasting, which can result in better investing decisions.
Computer vision-enabled tools also simplify document analysis. This capability helps banks onboard customers more smoothly. Perhaps most importantly, AI helps keep financial companies legal and compliant.
Open banking technology helps build partnerships between non-banking financial companies (NBFCs) and retail banks to provide customers with a broader array of unique financial services.
Banking application programming interfaces (APIs) allow third-party developers to access customer financial data securely without negatively impacting data compliance. The open banking category also includes account aggregators that enable customers to manage all their banking business through a single platform. Bank APIs allow NBFCs to integrate bank functionality into their apps and services. This form of banking enables NBFCs to check and verify customer information automatically. This functionality reduces the need for manual verification, which speeds the process and makes it more accurate.
Finally, open banking facilitates banking-as-a-service (BaaS), which allows financial service providers to reach new customers through third parties. This expanded reach can dramatically increase revenue.
People today have gotten used to highly personalized online e-commerce experiences. They expect the same from banks. Delivering a personalized mobile banking experience helps improve customer retention and increases positive word-of-mouth. Leading banks, credit unions, and other financial companies leverage a wide range of strategies and technologies to make the customer experience more personal. Some examples include buy now pay later (BNPL), omnichannel banking, and financial advisory tools.
For example, omnichannel banking provides a single view of customer financial information while allowing people to interact with banks in any channel they prefer, including phone, app, website, text, chat, and more. In addition, wealth management and financial advisory tools offer customized advice and investment information. It has a solid track record of improving investor and customer satisfaction. AI-backed machine learning is taking real-time personalized financial recommendations to the next level.
Blockchain is often associated with cryptocurrency. However, it’s much bigger than that. It provides highly secure, tamper-proof, and eternal records of all financial transactions. The technology rakes transactional transparency and overall security to a higher level. In addition, blockchain improves trade efficiency and can eliminate many manual and paper-based operations. Blockchain-powered smart contracts automate financial transactions. The technology can help improve the performance of financial contracts. Blockchain also reduces or eliminates the need for intermediaries and enables peer-to-peer (P2P) payments. Finally, decentralized finance (DeFi) uses blockchain to make financial services more accessible while reducing transaction fees.
Bottom line: Blockchain improves the speed and efficiency of banking transactions, especially cross-border ones.
Financial service providers are rapidly leveraging new technology to improve the efficiency of collecting data. Banking of things automates the process of gathering data from multiple sources. Doing so streamlines banking processes, such as KYC and lending. It makes it possible to provide real-time responses to loan and mortgage applications.
Going beyond data gathering, banking of things tech used on automated teller machines (ATMs) send alerts to back-office personnel if they experience low cash levels and malfunctions. It makes it possible to provide service to ATMs on a timely basis, delivering a better client experience.
In addition, technology-enabled digital wallets integrated into mobile phones and smartwatches allow customers to make seamless purchases. These devices communicate customer-specific data privately in real time. Perhaps equally importantly, they enable banks to detect fraud and control loss. It has helped take risk management to the next level.
The financial services industry deals with incredible amounts of sensitive customer and transactional data. Its technology infrastructure is a significant target for cybercriminals.
To prevent cyberattacks, technology provides cybersecurity protocols and software explicitly tailored for banking systems. These solutions help banks safeguard sensitive customer and financial data. Data encryption tools take this a step further, reducing the possibility of data leaks.
On top of this, AI-powered fraud detection identifies and prevents identity theft and phishing scams. Modern banks also employ anti-hacking software to protect their digital networks from unauthorized access. The software helps banks improve threat detection and response.
Immersive technologies provide personalized, interactive, and highly engaging customer experiences. Augmented reality (AR) and virtual reality (VR) improve interactions between customers and financial institutions. Cutting-edge, metaverse banks make it possible for customers to interact with them in realistic virtual environments. By leveraging immersive technologies, financial companies can engage clients more deeply, increasing customer satisfaction and loyalty.
VR also makes bank employee training more real and engaging, whether about bank processes and procedures, products and services, or regulations.
Banking process automation
Software robots allow banks to automate repetitive and time-consuming tasks. They can give banks, including smaller ones, a competitive advantage because their employees are able to spend more time on critical tasks and things that generate revenue.
In addition, RPA-based accounts payable software automates tedious tasks such as invoice processing, payment approvals, and reconciliations.
Banking process automation (BPA) supports automating mortgage processing, including evaluating applications and supplying loans to new homeowners. Banks use RPA to identify possible credit card fraud and look out for suspicious transactions.
Neobanking has made it possible for banks to have a digital-only presence. It can significantly reduce capital and operating costs. It delivers a seamless and fully-integrated banking experience to customers via cloud computing, open API, and more.
Neobank technology supports various services, including automated reconciliation, payroll management, and integrated workflow processes. It makes the customer experience more convenient by allowing people to access banking services on-demand and across platforms.
Traditional computing processes massive amounts of data day after day. It is resource and time-intensive. Quantum computing resolves this by offering quicker, more efficient, and more secure computing. It helps financial companies optimize portfolios and develop more accurate financial predictions. They also assist banks in derivative pricing and improving their cybersecurity programs.
Over the last several years, technological advancements have completely changed the banking industry and made the customer experience better in person and on devices like smartphones and tablets. It’s also provided traditional banks and fintechs the opportunity to offer a constant stream of new products and services. Financial institutions that don’t keep up with emerging technologies will fall behind and discover they’re losing out to their more savvy competitors. Leverage the information in this article to find out what areas your bank is keeping pace when it comes to tech use and where it could be lagging. Investing now in those areas will help keep your bank current and better position it for success in the future.