The banking industry has recovered from the financial crisis and has grown significantly over the period. After all the recovery, there may be an economic depression for the banks ahead shortly. Smaller fintech and large techfin companies are disrupting the banking sector.
The new technologies raising a threat to banks and financial institutions also present great opportunities. Organizations must learn to leverage advanced analytics, big data and new technologies to build customer loyalty, trust, and revenues which are primary success drivers. Here are the technologies that are disrupting and will relentlessly disrupt the financial services for the next five years.
1. Hybrid Cloud
Cloud computing has rapidly become the mainstream technology banks are opting. Banks are looking for the optimal blend of traditional IT, private and public clouds. This blend makes hybrid cloud a go-to tech for banks to incorporate into their operations. This tech provides banks with the flexibility and benefits of both private and public cloud while addressing compliance, governance, and data security.
2. API Platforms
The open platform banking and open APIs will turn the entire banking ecosystem upside down. The products and services offered and delivery channels used and underlying partnerships will face the transformation as well. Public APIs will provide more options for customers to interact with the bank. The bank’s data will help third-party companies to build their applications using the bank as a platform.
3. Robotic Process Automation (RPA)
Robotics process automation empowers the processes to learn from historical data and decision making patterns to make decisions by themselves. This intelligent automation has helped banks and credit unions by executing pre-programmed rules across structured and unstructured data reducing the administrative cost and regulatory processes by half. RPA simplifies reports by automation and eliminating human error.
4. Instant Payments
Instant payments provide transaction speeds that customer has always wanted. Instant payments open doors for more transactions which are made digitally instead of cash. This means that payments will become cheaper and more user-friendly. Banks are partnering together to offer immediate P2P payment experience to widen their customer base.
5. Artificial Intelligence (AI)
The growth of structured and unstructured data, rise of new technologies, and the need to meet customer expectations has expanded the use of artificial intelligence in banking and financial services. AI benefits the banks and credit unions in product delivery, risk management, back-office operations, and marketing. Banking organizations can now work with a large amount of historical data for every decision made in the past.
Blockchain can help the banking industry by streamlining and automating processes. Banks are gradually leaning towards the use of blockchain to improve efficiency, security, and cost-effectiveness. The blockchain is also helpful in inter-bank transfers, fraud reduction, KYC, and loan processing. Regulators must create clear guidelines for banks using blockchain technology.
7. Smart Machines
Smart machines usage has already begun in a few banks, and its impact on financial institutions is starting to take shape. Virtual assistants adopted by banks act as a digital concierge on behalf of consumers. Investment in digital technologies will result in more profitable relationships with customers. The tech-savvy customers of the present and the future will select a bank with the least friction.