It might be hard to believe and mind-boggling, but banking is one of the industries that actually struggle with adopting tech innovations. For sure, that significantly decreases the number of potential benefits a business owner may obtain.
However, as time goes by, digital transformation in banking will become inevitable, and those who rode the hi-tech wave first will skim the cream off. So why keep putting the things off? Check out the five most powerful banking trends and find out about the ways those elevate the business.
1. A perfect marriage of human action and artificial intelligence
Even though banking gets more automated and tech-based every day, some things will not go away in the nearest future. Talking about the “human action”: negotiations, empathy, customer communications. All of this will still play a significant role in business success.
Human managers will not be fully replaced by machines (at least for now). However, artificial intelligence will become one of the vital tools for anyone who’s aiming to increase efficiency.
Such instruments as CRMs, analytics software, customer tracking tools are paying off extremely quickly and allow the relationship managers to map out time, make more thought-out decisions, and increase productivity.
In this case, “the more the better” principle works, and those banks that are not afraid to make a bid for AI solutions will benefit the most. The others may be left in the basket.
2. Open banking is not going anywhere
Several years ago, the concept of open banking was considered a potentially profitable solution that can easily backfire and cause security and accessibility problems. These days open banking still has its flaws and risks but remains one of the pillars for every bank that strives for success or is working on a “digital-first” approach.
Near 70% of the banks prefer to integrate API gateways, and in the nearest future, this number will definitely grow as unwillingness to adapt and accept the new market requirements equals disintermediation.
The main asset for banks, in this case, will be an opportunity to get the most out of third party capabilities by elevating the quality of products and services offered to the customers. Open banking gives almost endless opportunities for bringing highly customized products to the table and, therefore, boost customer’s satisfaction.
3. CBDC isn’t a longshot anymore
As BIS CBDC survey showed, in 2020, 80% of the central banks are exploring the field, and 10% are considering adopting the general-purpose central bank-issued digital currency within the next three years.
The biggest struggle now lies within the legal field as only 25% of central banks all over the world have the authority to issue CBDC, and 40% don’t know what their legal status is.
For now, the US and China are two leaders to watch in the CBDC race. But at the same time, the benefits, including higher security level, lower transaction expenses, automation for the payment systems, increased transaction speed, etc., are significant and make CBDC a very tempting option for many advanced economies. So in the nearest future, we’re about to witness the launch of several tokenized digital currencies.
4. Generation Z pushes the changes further
Over the last 15 years, the banks were millenial-oriented. All of the innovations were implemented with the Millenials’ banking habits in mind. It includes the extreme popularity of mobile and online banking, numerous customer loyalty programs, lowering or cancelling the fees, the uprise of various expense tracking and investment apps, etc.
However, things will change during the next decade, bringing the next generation ? Generation Z ? into the limelight. In 2020 the oldest banking customers of this generation are about 24 years old. Those banks that want to stay on top in the nearest future need to tweak the marketing approach right now as the influence of Gen Z customers will grow day by day.
Gen Z represents young people that were born and grew up in a world where high-tech solutions are common, and most of the “traditional” banking experiences are seen as outdated and inconvenient.
All of this pushes banks to explore and experiment with tech innovations like virtual reality video banking and enhanced mobile solutions.
5. Banks opt for cloud computing
Cloud computing truly became a gamechanger in the banking industry. Who doesn’t want to cut the expenses on budget shortening hardware and infrastructure while increasing productivity and building better customer relations at the same time? And cloud solutions successfully do all that for the banks.
Those who are afraid to take risks still work with the traditional local servers struggling with scalability and manageability. But as more and more market players switch to cloud services, the trust level for cloud computing grows, and we can expect an even greater number of banks to opt for cloud computing in the future.
Not to mention, the number of benefits cloud computing can offer the banks is truly impressive, and neglecting those basically means staying behind in the market race. Nobody wants that.
