What is the Future of Banking?
The future of banking is more in flux than ever due to the rise of many new technologies in recent years. Blockchain, AI, API, self-kiosks, and digital account opening each provides their own unique advantages that banks can use. In addition, consumer expectations of banks have changed dramatically in recent years, with younger consumers expecting more digital solutions and the pandemic forcing many routine operations from in-person to online.
The Expectation for Digital Solutions
More than ever, consumers are expecting digital financial solutions in services. Younger generations are interested in something other than traditional banking methods. To meet this demand, more financial technologies are being developed than ever before.
Digital only banks are on the rise as people want digital financial services over more traditional financial services. This is reflected in new digital banks such as Chime, which is expected to have close to 20 million account holders by 2024.
Banking executives view new technologies such as blockchain and AI as having the most substantial impact on banking in the coming years. Despite the difficulties for financial institutions in adopting cloud-based technologies due to regulations, new technologies are available to meet the specific needs of financial institutions.
Friction and Customer Experience
New technologies offer financial institutions the opportunity to reduce friction more than ever for themselves and their customers by streamlining many everyday operations of these institutions. In addition, these valuable technologies can also allow financial institutions to ensure that banks maintain regulatory compliance more easily.
Customers want to avoid standing in line at a branch for routine transactions. Instead, they expect to have self-serve digital solutions that save them time. New technologies allow banks the opportunity to maximize their customer experience with real-time data and analytics.
Today financial institutions can collect data about how their consumers interact with their service, whether in the branch or online. With this data, it is easier for banks to customize the customer experience. This tool allows financial institutions to retain account holders who enjoy a personalized experience and offer it to prospective account holders. Banks that wish to make the most of the future of banking must prioritize the customer experience.
Crucial Role of Mobile Banking
This demand for digital banking is reflected in the fact that many customers will choose a financial institution based on the quality of their mobile banking. Consumers, more than ever, want essential services, including banking, from the palm of their hands. Therefore, banks that provide quality mobile banking options have a massive advantage over competitors if they can meet this new expectation.
Despite efforts by some banks to push online banking over mobile banking, younger consumers are still going for mobile banking. Mobile banking surpasses online banking and is growing at a much faster rate.
The most significant concern of consumers when it comes to mobile banking is security. Therefore, financial institutions must address these concerns to be prepared for the future of banking.
Value of API
API has been an incredibly valuable tool for allowing financial institutions to make the most of the potential of new financial services. In addition, fintech companies have been using API solutions to significant effect.
However, larger and more established financial institutions need to follow the lead of these industry innovators to ensure they are ready for the future of banking. New technologies such as AI also enable branches to be more resilient towards potential security breaches.
Self Serve Kiosks
Another critical component of the future of banking is self-serve kiosks. Customers are very comfortable using these, resulting in higher customer retention and lower costs for branches implementing them. In addition, these self-serve kiosks can have a visual id verification feature to stop transactions when a thief attempts to access a user’s account.
Central Role of Personalization
Personalization with new technologies allows banks to suit the needs of all sectors of society. Any financial institution should aim to provide financial services to as many people as possible. This personalization ensures that customers are always happy with their banking experience as they can have it fine-tuned to their preferences.
Neobanks have used this aspect of personalization to compete effectively with more established banks. Such personalization is only possible if a financial institution has the technology to both collect and analyze the necessary data.
Rise of Digital Account Opening
Another aspect of the future of banking is digital account opening. This allows consumers to open checking accounts, personal loans, or even trade stocks. But, again, consumers can accomplish these tasks from a variety of devices. This new tool can verify consumer identity and check for any potential for fraud.
This serves the twin purposes of providing a better customer experience and protecting the bank from fraudulent applications. Digital account opening can also save a bank time and money by automating the application and data collection process.
Value of Blockchain
Blockchain technology has also changed the nature of financial services. For example, with blockchain, it is straightforward to transfer funds between banks and countries, reducing the need for third party verification.
Similar to other new technologies, blockchain can allow financial institutions to streamline their regulation compliance procedures. Customer verification is another useful feature of blockchain, and fraud is less likely due to the decentralized nature of this technology.
This is especially useful for financial institutions that can be vulnerable to hacking due to large centralized systems. With blockchain, financial institutions have another opportunity to automate much of their operations. Allowing them to save time and money.
Fortunately, for more established banks that continue to rely on more traditional methods, plenty of new technologies and fintech companies provide solutions. However, consumers have very different expectations of large and small banks, and it is essential that these banks adapt to these new demands.
Central to these demands is streamlined mobile and digital banking along with a more customized customer experience both in the branch and online. With new technologies such as API, blockchain, self-serve kiosks, mobile banking, and digital account opening, banks can be prepared for the future of banking.