Adoption of new tech can be beneficial for all banking-related companies to be competitive
The digital era is changing the way businesses function on a day-to-day basis, especially in the banking sector. Technological advancements in the industry are continuing to influence the future of banking around the world. The global banking sector has become strategically-focused and technologically ahead in responding to consumer expectations.
Banking and securities organisations are investing in emerging digital technologies such as artificial intelligence and blockchain to create new product offerings and also to respond to evolving customer demands. According to Gartner India’s banking and securities sector is expected to continue to invest in digital business, with spends estimated to grow 9.1% to $11 billion in 2020.
Technology, today has its hand in every aspect of the banking industry and the influence of technology is taking banking into a digitized future. An increasing demand for a quicker and digitized banking experience from millennials and Gen Z is transforming how the entire banking ecosphere operates. New technology in banking is already altering the financial sector, and the traditional banking landscape is set to rapidly change in the foreseeable future.
Mobile banking has become a go-to process for users to make deposits, account transfers, and monitor their expenditure and earnings. Lately, the banking sector has become an active adapter of artificial intelligence and has explored and implemented this technology in new ways. The infiltration of artificial intelligence in the banking sector had been unnoticed and inactive until the advent of internet banking.
Banks are also experimenting with new mobile applications and voice-enabled gadgets to enhance both delivery and contextual personalization. Ultimately, the consumer is placed front and centre. As technologies continue to evolve, the banking sector is continuing to accelerate its investments in innovation and digital enhancements.
The payments industry will continue to be one of the most dynamic areas of innovation in the banking industry. Impacted by changing consumer expectations and driven by technological developments, innovation will continue to come from traditional financial institutions, fintech firms and big tech players. Data-led AI, machine learning, and customer analytics will become the driver of client engagement in the coming years.
Banks are also adopting safety features, such as advanced cryptography and biometrics which help protect against bank scams, and latest applications that are making it easier than ever to do banking without visiting a branch. Biometrics eliminates the hassle of remembering passwords and makes the banking experience more secure and seamless. Banks and financial institutions have become more comfortable with a faster pace of innovation, using data and analytics more extensively and digitizing processes as opposed to simply turning paper into PDFs which never existed a decade ago.
According to the 2019 Gartner CIO Survey, technology leaders in banking place a higher priority on legacy modernization than do technology leaders in other industries. While user-facing digitalization efforts are critical to delivering a complete digital experience to customers, digitalization of internal processes is necessary to support this initiative. Gartner also says that of the total technology investments being made in the Indian banking sector, 23% are for digitalization of internal services. This investment is expected to grow 9% over the next two years.
Organizational cultures must be shifted to support innovations that will impact increasingly outdated business models. Banks and credit unions must also anticipate consumer needs and innovate in ways that will prioritize the most effective mix of capabilities, processes and people.
Banks are hoping that upcoming technologies will allow them to deliver a faster, more transparent experience to consumers. A large portion of their resources, however, is necessarily dedicated to security, compliance and other industry-specific requirements, which has allowed financial service providers i.e. non-banks that are not regulated by the banking industry — to flourish, according to a 2016 report from market intelligence firm Greenwich Associates. Since these companies can devote a greater percentage of their assets into cutting-edge financial technology, they might be able to innovate more rapidly than traditional banks, attracting tech-savvy customers in the course.
The fundamental applications in AI include bring smarter chat-bots for customer service, personalising services for individuals, and even placing an AI robot for self-service at banks. Beyond these basic applications, banks can implement the technology for bringing in more efficiency to their back-office and even reduce fraud and security risks.
With more and more fintech firms breaking new ground through their powerful, cutting-edge technology, India has disruptive potential in the finance sector, resulting in a record-breaking number of digital transactions as merchants and consumers both embrace the ease of digital payments.
Senior Vice President, BFSI, Birlasoft