A well-operating financial system drives a well-functioning economy. Technology is one of the most powerful driving forces for the current economy and the modern financial systems. Banks have grown from being a safe place for keeping valuables to a one-stop solution for all transactional operations.Today, the (BFSI) Banking, Financial Services, and Insurance industry operate on smart devices, making online transactions the new norm.. As we move more in-depth into the digital age, we can anticipate seeing technology-driven, more groundbreaking, innovative digital transformations in banking with strategic solutions.
The COVID-19 pandemic was an arm-twisting of unprecedented proportions for banks, placing their technology architecture, strategy and workforces under tremendous pressure. For most, the crisis was a sobering affair that dispelled all illusions about how far they progressed regarding digital transformations and cloud migrations. According to research, 62% of customers consider more comfortable and more secured banking one of the best technological developments of the decade, and 56% of the banks are now considering digital disruption as the crux of their strategy.
Yet, silver linings could be found in how fast banks could acclimate to a new reality amidst many pandemic challenges. Most of them quickly rebuilt their business with a digital core that supports a more adaptable workforce, a more useful agile operating model with ever-changing customer needs making the future of banking more secure.
The technological advancements, changing customer expectations continually drives the financial service industry to innovate and accustom. Technology is aiding the financial sector to fill the gap between the conventional and revolutionary banking systems by improving customer experience, operational efficiency, and data security. The digital approach is applied to payments, retail banking, finance management, insurances, commercial banking, and finances management.
Banks with a clear-sighted perspective persist in expediting their digital transformations, reimagining their people and data to their architectures and ecosystems. New banking competition is dawning where architecture is given the topmost priority, and leaders are also deciding on the ingenuity of their technology choices.
The popularity of FINTECH has made banks exclusively automate their processes; New banks are launching NEO banks that are launched digitally without the actual existence of Physical branches. Numerous Technology Trends have emerged and have sped their way into every bank’s system.
Want to know what are Top 5 Future technology trends shaping the future of digital banking? Have a look:
Artificial Intelligence or AI is now developing as a part of the business environment and is reinventing the whole BFSI ecosystem by enhancing automation and dynamic systems. AI supports decision-making, enhances customer service with virtual assistants and improves operational efficiency. Also, advanced Machine Learning algorithms help to process data quickly, thus helping in compliance management, profile credit risk and detecting fraud even before they happen. AI and machine learning save time by personalizing client experience, crunching reams of data, and increasing revenue growth. A recent study states that 10 to 25% of all the banking functions across all banks will be performed by machines in the next few years. A big group of consumers assume that the gap-fill in the financial market is by applying self-serving technology platforms that help customers conduct all the banking operations remotely. A study by McKinsey states that the value of AI and ML could be worth as much as USD 1 trillion annually.
Blockchain, an emerging technology trend, is already creating transformation ripples in the BFSI sector. According to the global bank Santander, Blockchain-based systems will enable banks to save US$15-20 billion by 2022.
Reserve Bank of India(RBI) believes Blockchain technology holds enormous potential for disrupting the banking and financial markets. Organizations across the globe are already establishing blockchain in a wide variety of banking and investment applications, like solving challenges met by investment banks to assist customers in making safer payment transactions. According to a report by MarketWatch, the investment of blockchain in the (BFSI) banking and financial sector will reach $17.47 billion by the end of 2025.
With Robotic Process Automation (RPA), the banking industry is demanding the use of intelligent automation to drive efficiency, remove repetitions, and improve customer satisfaction by providing fast and efficient services. Robotic Process Automation (RPA) mimics human actions to extract more data and navigate digital systems, and this level of automation is invaluable to the BFSI sector as it automates workflow, reduces errors and speeds up digital transformation. RPA has diverse functions and can streamline customer service and operations, across various industries, from end to end. A report by KPMG states that RPM could preserve financial associations as much as 75% in cost savings.
Cyber threats can emerge from anywhere, at any time; the most dangerous part about cyber risks is their ever-changing and evolving nature. 69% of CEOs from various financial institutions reported in a PwC survey that they are highly concerned about cyber-threats. Also, 65% of the companies said that they adopted cloud-based security measures in their organization as
Cyber-risks demand a proactive approach as part of BFSI enterprises. They need first to assess, evaluate, and understand the present security status of their organization and identify their cyber-risk appetite. They should develop a cybersecurity roadmap that will help them to gauge the vulnerable areas and seal those gaps early- This is why organizations should hire and train cyber-security teams to mitigate the threat and vulnerabilities in advance effectively. In an IBM report, it is estimated that the cost of a data breach in the financial sector was US$5.85 million in 2020.
Big data in finance has led to meaningful technological innovations. Financial firms can deliver personalized recommendations to customers, create more efficient processes to provide strengthened security, deliver better customer service and drive competitive advantage. It helps them get revenue opportunities by analyzing customers’ spending patterns, financial situations, credit information, and social media activities.
A recent study states that 71% of banking and financial firms utilize big data analytics to have a driven advantage compared to their peers. Big Data improves trust equity by assuring cyber security measures and managing voluminous and unstructured data. Predictive analytics enable institutions to deliver customers personalized insights into their investments.
Banking and other financial sectors have been more advanced in their digital transformation processes than any other industry, future technology trends transforming the banking industry into businesses offer plenty of advantages to satisfy customer needs. Forward-thinking banks are embracing these thrilling new technologies to decrease costs, become efficient and boost customer satisfaction, assuring a place in the digital future. Thus, adopting and enforcing these technology trends will accelerate the digital transformation in the banking industry.