The rise of technology has led to a profound change in the traditional banking sector, transforming the way it operates and interacts with customers. The digital transformation in banking has been a major shift from paper-based processes to digital ones. It encompasses all aspects of banking operations, from customer service to product offerings, processes, customer experience, data integration, and sales structure.
As technology continues to shape the direction of the banking industry, banks must adapt and develop strategies that incorporate these technological advancements. The current global pandemic and economic crisis have only accelerated the need for digital transformation in banking. According to a recent study, 69% of boards of directors are accelerating their digital initiatives in response to the pandemic and economic crisis.
Big banks are starting to take advantage of the benefits of technology adoption, especially as fintech startups with a focus on technology enter the market. The key to success in the future of banking lies in the effective use of technology. Banks must embrace technology at all levels of their organization, both internally and externally, to transform their products, attract customers, empower employees, and optimize operations.
Digital transformation of the banking industry is inevitable and necessary. Banks must adapt to the technological advancements in the industry and incorporate them into their strategies to remain competitive and meet the evolving needs of customers. The future of banking will be shaped by technology, and those who embrace it will be the ones who succeed in the years to come.
Over the past decade, the finance industry has undergone a significant transformation with the rise of financial technology companies, commonly known as fintech. These companies have disrupted various sectors within finance, starting with payments and subsequently expanding their influence across the entire industry. Even traditionally secure areas of finance are now facing competition from new players and innovative challengers. Here are some of the sectors that have witnessed substantial innovation due to technology-focused startups.
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The great competition in the banking sector is always at the top level and competition is good for consumers. Every bank seeks to increase its market value by crossing the limitation of its services and offering new age capabilities. In this context, the influx of Neo banks has inspired the banking sector to a larger extent.
The banking industry is extremely vulnerable to hacks and scams; fraud detection and mitigation should be the topmost priority of the banks. The financial services industry has been getting transformed through the adoption of AI. Deep learning which is an important part of AI is a crucial fixture in the banking industry giving way to infinite possibilities and transforming the way people/organizations bank.
The Economist report (2020) says nearly 59% of the participated bank executives believe the branch banking model will become obsolete by 2025. That tells most consumers are looking for seamless digital banking services. As consumers are getting aggressively tech-savvy, it becomes quintessential for credit unions to implement top tech trends. However, they are far from behind in going fully digital, as digital transformation in credit unions is still a tough nut to crack.
With the increased emphasis on AI in Banking, banking institutions are able to extract meaningful and actionable insights from raw data and leverage them to provide better services. Also, it benefits banking institutions by increasing workforce productivity, reducing operational costs by automating processes, reinforcing security, ensuring better compliance, and enabling exceptional user experiences all leading to an increase in top-line.
With FinTech growing across industries, Banking as a Service is gaining more and more traction. Banking as a Service has several benefits to offer, ranging from enhanced user experience and innovative solutions to open banking and meeting the needs of SMEs. As the growth of Banking as a Service accelerates, there are several new trends rising in FinTech sector.
Embedded finance is disrupting the financial world by reshaping financial services distribution model. Businesses that leverage embedded finance are not only providing exceptional services to their customers, but also improving their bottom line.
As we move towards digital economy, we are facing a looming threat of cybersecurity in banks. Leveraging techniques and practices that are designed to protect our data is paramount to successful digital revolution. Whether it is an accidental breach or a well-coordinated cyberattack, the strength of cybersecurity in banks determines the safety of our Personally Identifiable Information (PII), and by extension, ourselves.