Tech Trends That are Transforming Banking

The banking industry has evolved dramatically over the past several years with the emergence of new and exciting technology. Smart phones have made it possible for consumers to conduct all types of financial transactions easily and on their own time, which has been extremely beneficial and will continue. As technology advances at a rapid pace, there are several trends in finance that will further transform the industry. According to The Financial Brand, these trends include Artificial Intelligence, cloud computing, reinvention of banking, Blockchain and extreme digitization.

Artificial Intelligence

These days, it’s almost impossible to discuss banking without mentioning Artificial Intelligence (AI). AI, a form of computer science that builds smart machines capable of performing tasks that are typically performed by humans, is everywhere. While it may sound counterintuitive, AI actually offers tremendous benefits to humans. In the financial world, this can consist of everything from bots, who can assist customers with simple banking tasks that used to take people time and energy to complete, to analytical solutions, such as fraud detection and financial forecasting. Banks, both large and small, are widely utilizing AI to add value to their customers, who appreciate the exponential convenience that AI offers. And while AI has completely transformed the financial industry, it is poised to transform virtually every industry in the near future. 

Cloud Computing

Cloud computing is a key component to digital transformation and enables financial institutions to take a more holistic approach to their business. The banks that are able to quickly manage this transition to the cloud will benefit the most, as the financial industry continues to evolve to a multi-cloud world. While transitioning from data centers to private clouds will happen over time for big financial institutions, smaller banks are generally able to adapt more quickly. 

Reinvention of Banking

Cloud and AI are largely responsible for the dramatic reinvention of banking, having ultimately made it much more customer-centric, as technology is able to more easily meet consumer needs. While smaller banks are also more likely to win in this area, as they are not weighed down by outdated automation that needs to be overhauled, they often have less money to invest in technology. Regardless of the speed at which companies are able to adopt new technology, consumers demand and expect their financial institutions to have it, regardless of their size.

Blockchain

Blockchain, which is technology in the form of a secure transaction ledger, is another area that is massively transforming banking. Blockchain facilitates trust between trading partners making it possible to successfully transfer currencies and makes financial transactions, such as money transfers, fast, easy and efficient. Consumers can use mobile phones to electronically complete a transfer instead of waiting on line for an agent. Blockchain can also minimize fraud as its technology is hack-resistant. Although still relatively now, Blockchain is expected to really take off over the next 3-5 years.

Extreme Digitization

Digitization is a trend that has changed how people conduct their banking transactions, making them more accessible to the masses. While the goal of most financial institutions has been to automate and digitize as many processes as possible, banks are now ironically taking a step back and assessing how humans can re-enter the equation to provide value.

Diversification of Services

One of the ways financial institutions can add worth to their digitized offerings is through the diversification of services through third party partners, like ApexEdge, which helps banks stay competitive through their bill negotiation and subscription management services.These services drive major savings for the banks’ customers and enables them to personalize their customer relationships and have compelling conversations. 

As traditional banks continue to transition from a retail model to a more digital model, they can look to the digital-first fintechs to fulfill their customers’ needs and become more relevant to them both now and in the future.