Tech trends taking the banking industry by storm
Technology advances at a pace that many industries have difficulties keeping up with.
The banking industry, in particular, is undergoing some changes now that are a product of tech advancements and forces such as the following 5:
AI has applications in many industries. In our article The Role of AI in Financial Services, we explain to a greater detail how artificial intelligence affects the banking industry specifically.
However, a major contribution of AI to banks is the increase in efficiency and improvement in customer service, brought on by an ability to handle and interpret large data sets.
Customers demand increasingly more personalized and all-rounded service and the banks that provide this type of service will get ahead, especially because a lot of financial institutions are still tied to product silos and tend struggle with customer management.
Voice is not only the future, but it is also a technology already used by many consumers in their day to day activities. As the popularity of voice assistants increases and voice recognition becomes more and more refined, consumers will get accustomed to this form of interaction and will begin demanding it from more services and institutions.
As banks are becoming increasingly digital, entering the next phase and adopting voice is the logical step.
Some banks have already adopted voice and are offering voice assistants to help customers manage their finances.
Open banking is a regulation that requires banks to release data to third-party applications, at the request of the customer to whom the data belongs. This regulation exists so that customers can benefit from applications whose purpose is to help manage their finances or perform transactions on their behalf.
These applications have grown in popularity over the last few years as they simplify significantly the banking processes. Take MBway for example, a Portuguese app that links to a customers’ bank cards and allows for transactions to be performed via mobile number. Like MBway, there are many apps that facilitate personal financial management, thanks to Open Banking.
This presents somewhat of a threat to banks who are forced to sit by and watch as their customers reach out to these savvy financial solutions.
Fintechs and Disruptor banks
The rise of fintechs and digital banks, or disruptor banks, as they are also called, have caused some disturbance in traditional banks because through the technology they harbor, they are able to provide the convenience, and simplicity of service that consumers value and that many banks lack.
This threat is an indication to banks that they need to embrace technology and put their customers first because there are plenty of younger, and more tech-savvy competitors entering the market whose whole focus is to respond to the customers’ needs.
This has been something of increasing importance for every industry dealing with customer data. Banks, in particular, deal with a lot of personal and account-related data and need to have in place systems and firewalls capable of protecting that data in order to safeguard their reputation and maintain their customers’ trust.
However, cybersecurity becomes harder to achieve when users are demanding to have their data shared to third parties which makes the banking industry extremely vulnerable.
In order to comply with data privacy laws and still be able to give customers the ease of use they demand, banks have to implement more advanced forms of security such as multi-factor authentication and biometrics, among others.
Technology and evolving customer demands need to be made a priority otherwise banks are clearing a path for other banking solutions to swoop in and take over the retail banking market.