New technologies and the widespread availability of data and opening banking are resulting in some of the most innovative new products and services being developed in the banking industry. These products and services are only the beginning of the future of banking.
In the next decade of this digital age, retail banking will make its full digital transformation to enable banks and financial service providers (FSPs) to provide grounding customer experiences we’ve never seen before in banking, or any other industry.
Why Digital Banking Is The Future
It wasn’t that long ago when traditional banking meant managing your finances by making a trip to your local bank branch to speak with your financial advisor or complete transactions. These days through digital banking, consumers have access to their finances anytime and anywhere so long as they have an internet connection or have enrolled in their financial institution’s mobile app.
Digital banking allows businesses to reduce risk and have more control over their finances than ever before, with access to data analytics and increasingly intuitive AI powered software to create efficient processes for both their operations and customer experiences.
The rapid technological evolution in how both consumers and businesses interact with banks helped solidify digital banking as the future for the financial industry. As the banking industry continues to evolve, so do the latest banking trends that help show just where we’re headed in the future of banking, and how fast it could take to get there.
What Are The Latest Trends In Banking?
1. Digital Banking Transformation
When talking about the digital banking transformation, it’s important to distinguish between the “digitizing” and “digitalizing” of banking.
Digitizing involves a bank or FSP turning their manual or paper based processes into digital format. Digitalizing involves the broader evolution of digital technologies like artificial intelligence (AI), fingerprint or facial recognition software, or other advanced technologies that can only be enabled after a bank completes digitizing its operations and offerings.
Digital banking isn’t just a trend for banks and FSPs to consider adopting; it is a requirement to stay relevant in the banking industry. Customers have come to expect omnichannel banking services offered from their bank so they can have better banking experiences and seamless shifts between touchpoints. Whether that touchpoint is the ATM, a brick-and-mortar bank branch, on the phone, or online is all left up to the customer.
Digital banking’s focus on providing a customer-centric experience means future innovations will continue to provide customers flexible options to do their finances. Mobile banking is great to manage everyday transactions, but will increasingly help to streamline banking’s more elaborate processes like applying for a mortgage.
2. Open Banking
With the passing of the Payment Service Providers Directive (PSD2) in 2018, Open Banking became a hot topic in the financial sector for the last couple of years. PSD2 effectively gives consumers more control over who can use their financial data to provide them more personalized and relevant banking experiences.
Since open banking enables access to financial data and market and trends and patterns through application programming interface (APIs), consumers can authorize which APIs they wish to connect their accounts to.
Growing partnerships between banks and FinTechs, as well as the amount of data shared between financial service providers and third party developers encourage the development of new products and services.
3. Artificial Intelligence
AI in banking is quickly maturing in helping FSPs streamline processes, reduce human errors, and deliver customers more personalized experiences. Using machine learning, data models use natural processing language to process consumer inquiries, and present them relevant solutions. This AI chatbot technology eliminates the need for phone operators to spend so much time attending to every customer inquiry that comes in, and more time on more complex inquiries.
Banks can also use AI to provide account verification services so businesses can mitigate fraud with near instant authentication of accounts in a transaction. Also through machine learning, AI is able to evolve its processes every single time it completes a specified outcome. Each process, any errors to occur are logged by the AI, and corrects it. AI never makes the same mistake every time, ensuring processings are always being refined as long as they’re set in place.
As AI gets stronger and more intuitive, the possibilities it can unlock for banks and consumers alike are sure to be unprecedented.
4. Financial Data Analysis
Across all industries, institutions are leveraging Big Data to receive actionable business and market insights through financial data analytics. Financial data analytics include the processing of complex sets of data on a businesses’ financial performance into easy to understand models that empower stakeholders at a company to make well informed financial decisions backed by highly accurate data.
This ongoing trend in the industry has created a strong demand for data analysts to join banks or FinTechs in helping develop models and applications financial professionals can leverage for simpler and more insightful data analysis. FSPs can also use financial data analytics to gain key market insights. This gives them an advantage over their competitors, and enables them to grow and expand their customer bases knowing they’re going after the right individuals and businesses in need of digital banking services.
The Future of Banking Technology Starts Today
FinTech companies like Envestnet | Yodlee are helping fuel innovation within the banking industry by providing businesses with the financial data and analysis they need to thrive in today’s market. With our products and services like data aggregation, account verification, and market insights to name a few, we are committed to making the banking industry better for everyone.
As the market leader in data aggregation, Envestnet | Yodle handles data responsibly to protect our customers and their customers from fraud and misuse. We are open banking ready and offer industry leading practices for data security, regulatory compliance, and privacy for accessing and handling personal consumer credentials and financial data.
To start experiencing the future of banking today, partner with Envestnet | Yodlee.
