When we think of technology trends in the banking industry, retail banking and mobile banking are the first concepts that enter a person’s mind.
According to businessinsider.com, retail banking is ‘the specific services banks can offer to consumers like savings and checking accounts, credit and debit cards, and loans.’ Due to the advancement of the digital age, people have started changing the way they think, interact, and conduct business on a daily basis.
Technology has also thoroughly influenced the future of banking all over the world. It plays a major role in almost every single aspect of the banking industry; thus completely changing the way the banking industry operates. It has become an integral part of the banking industry.
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Banks have started realizing that they must do more than their competition if they want to sustain their consumer base. Thus, they have started utilizing various technologies to stay at the top. Here are some of the top technology trends in the banking industry that are being implemented.
APIs are one of the top technology trends in the banking industry. API stands for Application Programming Interface. It is a software that allows two different applications to interact with each other. It is essentially a messenger that gives your request to whom you are requesting it from and gives the response back to you. Think of an API as a broker when you are buying or renting a house. You need a sort of ‘middle-man’ to convey what you want to the real estate agent. The person who conveys your requirements to the agent is the broker. The API acts as a broker. It gives and provides information; thus, allowing the transmission of data from one place to another. There are different types of APIs available such as Java APIs, Web APIs, etc.
Open banking is also a top technology phenomenon that, though has been developing over decades, has spread significantly in the shortest span. According to Investopedia.com, open banking is ‘a financial practice that provides third-party financial service providers open access to consumer banking, transactions, and other financial data from banks and non-banking financial institutions through the use of application programming interface (API).’ Open banking allows banks, non-financial institutions, and third party institutions to acquire data and accounts of consumers. It has been an integral part of the banking industry and the growth of the banking industry. It is basically a way for consumers to secure their data with not only their bank but also with other institutions. Some benefits of open banking are completely new and improved customer experience, new streams of revenue, and a sustainable service model.
Voice banking has become an integral part of the banking industry. Most banks in the US and Europe, as well as other countries, have started experimenting with voice technology when it comes to finding out the consumer’s bank balance, electricity bills, amongst other things. The technology is available in almost all banks; however, the industry is working on making the technology as popular as touch technology. According to a few studies, it is understood that voice banking could save the industry almost 3 billion dollars a year. The process is advancing quickly and it will eventually be in demand in the next few years.
Though not a new trend, cybersecurity is more in demand now than it was a few years ago. With the advancement of technology and digital channels; the banking industry is incredibly susceptible to attacks on the cyber front. Banks and other financial institutions are more at risk now than ever. Newer banking regulations mean that banks are required to share consumer information and data with third party institutions; thus, making the industry incredibly vulnerable. The problem is, consumers, want both securities as well as easily accessible services. Technology trends in banking that are being implemented are multi-factor authentication, secure applications, digital signatures, as well as some other forms of security like biometrics.
Mobile banking is a phenomenon that is one of the most dominant in the banking industry. It is defined as ‘the use of a smartphone to perform various banking procedures like checking account balance, fund transfer, and bill payments without needing the visit the physical bank location.’ It has almost completely taken over the banking industry because of the advancement and need for technology. It is said that in the years to come, mobile banking will become more and more efficient and convenient; thus, eliminating the need for physical banks. Some future trends in mobile banking also include voice-activated banking as mentioned in point three.
Also, read our previous blog to know on how “Mobile Apps are Transforming the Banking Sector”
Digital wallets have completely changed the banking industry and the way people make payments. Different apps that are focused around digital wallets are taking over the industry. This form of payment system is one of the fastest-growing payment systems in the world because of its convenience. Digital wallets make payments possible 24 hours a day and 365 days a year. Digital wallets are said to change the banking industry significantly in the future to come.
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Blockchain is said to be the future of the banking industry. Blockchain technology is the core component of cryptocurrency and the future of banking and financial services. It uses technology to create blocks that process, verify and record transactions without being able to modify the information. Blockchain is going to revolutionize the way financial services like payments, clearance and settlements, stock exchanges, and lending are conducted.
Robo-advisory platforms are digital platforms that provide financial planning to customers with almost no human supervision. It collects financial information from clients about their current financial situation as well as their future goals through an online survey to help clients with their assets.
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E-KYC stands for Electronic Know your Client. It is a way of finding out information about the client through a scanned copy of an address. E-KYC has made the process much easier. Previously, the KYC process would take 15 to 20 days. Whereas, due to E-KYC, the process takes only 15 minutes.
Banking and technology are closely interconnected. Technology, as it has with other industries, is completely changing the way we utilize banking services as well as changing the way the banking industry conducts business. The future is technology.
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