How Technology is Driving a Radical Shift in the Banking Industry
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The banking industry is one of the most radically affected sectors by the developments of Information technology. It has become a critical business resource because its absence could result in poor decisions and ultimately business failure. Technology has opened up new markets, new products, new services and efficient delivery channels for the banking industry.
Banks have benefitted in several ways by adopting newer technologies. E-banking has resulted in reducing costs drastically and has helped generate revenue through various channels. The number of the customer base in banks has also increased because of the convenience in - Anywhere Banking. In addition, the progress of technology and the development of worldwide networks have significantly reduced the cost of global funds transfer. It is information technology, which enables banks in meeting such high expectations of the customers who are more demanding and are also more techno-savvy compared to their counterparts of the yesteryears. They demand instant, anytime and anywhere banking facilities. Moreover, millennials prefer transparency and convenience. They essentially demand to have a personalized product or service at their fingertips wherever and whenever they need it. With drastic changes in the scale, scope, and complexity of millennials’ demands as well as the financial services available, technologies like SMAC (Social, Mobile, Analytics, and Cloud) are providing banks with the means to reach more customers than ever before.
Top trends that will transform, disrupt and eventually enhance the banking and financial sector:
Impacts of New Age Technology: Soon banks will deploy AI as the primary method to interact with customers and the applications will extend to fraud detection, customer services, financial advisory and legal work. AI is a huge game-changer as there is increasing evidence to show the ability of machines to learn and adapt to their environments. Chatbox will have largely taken over by 2030 and inform people on personal and financial obligations
Changing Customer Profile: Millennials have high digital expectations for everything, including from their banks. Digital transformation must enhance the users’ experience – intelligent round-the-clock service
The Emergence of New Business Models: FANGs (Facebook, Amazon, Netflix, Google) and other tech companies have redefined traditional business models. Tech companies are forcing traditional business models to rethink their operations
Addressing Key ChallengesApart from the immense opportunities, there are few challenges that need to be tackled while adapting digitalization in the banking sector like security risks, lack of knowledge amongst people to use e-banking facilities etc. Providing a seamless Customer Experience and Secure banking environment are the 2 key challenges faced by the banking institution today. In addition, training at all levels on the changing trends in IT is the requirement of the day for the banks. Governments need to work with the different sectors to create standards and a regulatory framework, Industry professionals must understand how AI and robotics can work for and with them and be open to change, Customers need to become more accustomed to AI and robots and decision-makers across various institutions need to prioritize and focus on what consumers want and need