In recent years, technological innovations have speedily transformed traditional banking systems. Modern banking has evolved to become swift, efficient and more often than not completed in just a few clicks on a mobile device.
Moreover, despite the rapid advancements of recent years reports predict that the way finances are managed in 2030 will be drastically different from now. Elements of the banking sector are challenged by the shortcomings of its traditional infrastructure and architecture. Governments and regulators around the world are encouraging the adoption of innovative technology for the following reasons:
- Agile digital platforms are needed to support the rapid growth and transformation of the digital economy.
- Investment in technology can enhance productivity and innovation.
- Investment in innovation can also help in addressing socio economic challenges. For instance, to ensure financial inclusion during the pandemic, the governments of Indonesia and Philippines deployed e-wallets for distribution of Covid-19 relief aid.
The banking industry recognises the importance of embracing new technologies, adapting to changing business models, and placing customer satisfaction and experience at the core of all strategies.
The Future of Banking
Although the transformations that technology can facilitate are endless, there are certain technologies that are going to be at the forefront of future banking systems.
- The Fintech Revolution: According to an analysis, fintechs are empowering resilience in a time of global uncertainty. Fintech companies offer tech-powered and data driven financial services and Fintech-as-a-Service (FaaS) extension services to banks which can make banking operations speedier, efficient and frictionless. Fintech products and services, like the Digital Sandbox, offer a secure and simulated environment to banks and other financial organisations for swiftly evaluating innovative solutions and modifying them to suit customer parameters and market trends, thus building a strong future economy.
- Open Finance: Open Finance proposes to put all of user’s financial data in one place, which includes bank and cryptocurrency transactions, investment and pension funds among other transactions. This API-enabled data sharing can then be leveraged to develop products and solutions tailored to meet customers’ specific needs. Open finance can entirely change how consumers and businesses interact with financial services, which makes it the next phase in the evolution of open banking.
- AI: According to a report, AI applications are expected to save banks $450 billion by 2024. AI can be designed to meet any specific requirements of the banking industry. Financial institutions must ensure that any Artificial Intelligence they use is legal (especially in terms of privacy and data protection), and robust. Organisations that can use real-time data to anticipate customer needs, innovate quickly, and then implement operational changes with speed and efficiency will increasingly succeed.
- Cyber Security Firewall: According to estimates, increased demand for cybersecurity will drive global security revenues in the retail banking industry to roughly $10 billion by 2024. As the world moves towards a cashless economy, it is important that new banking and payment providers adopt advanced security infrastructure and services
With technology assuming a key role in the banking sector, it becomes critical to strike a balance between security and innovation.
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