Global Trends in Banking Technology

Innovative technologies in the financial sector are revolutionizing the banking system and banks are embracing new-generation automation technology with greater pace. As a result, the conventional banking has given way to core banking, remote banking solutions, electronic payment mechanisms etc.

The importance of technology in enabling the banking sector to deal with changing customer demands, improve operational efficiency, and enhance regulatory compliance is increasingly recognized by banks across the globe. This is evident by the significant growth in IT spending by the banking sector which is envisaged to grow further in the coming years.

Core banking functionality is rapidly transitioning into a “must-have” capability for banks. Increased core banking platform upgrades are occurring across the globe. The core banking packages being offered today have richer functionality and are platform independent, allowing for easier integration.

With tight timeframes for Basel 3 implementation, banks are needed to take rapid measures for risk management tools, despite uncertainty about specifics such as selecting vendors and systems; making budgetary allocations; and defining timelines for the transition.

The transaction history of a customer contains valuable information about their purchasing and investment preferences. Though this transaction-related data is available with banks at an individual customer level, lack of appropriate business intelligence (BI) and data analytics capabilities has resulted in a less than optimal use of this data in providing customized rewards, products, and investment solutions to customers. Banks are sitting on a treasure trove of information about their customers and by using this information, banks can not only meet their customers’ financial needs more effectively, but can also derive a major competitive advantage in a marketplace which is becoming more and more competitive and globalized.

Customer Relationship Management (CRM) plays a key role for achieving this objective of increasing profitability. Analyzing the product life cycle management helps banks focus on profitable clients, achieve a better volume-client-product combination, and develop a superior distribution and multi-channel approach. CRM provides increased knowledge of customers that helps banks better cross-sell and up-sell their products, which in turn increases the effectiveness and efficiency of sales efforts.

Payments represent a significant percentage of a bank’s revenues. Payments products represent a portfolio in which different products are in different stages of their lifecycle. By establishing payment hubs, intelligent trade-offs for allocating limited investment resources can be made. There is a growing realization in the industry that redesigning payment processing into payment hubs can enable banks to implement revenue and cost-focused strategies.

The following five emerging banking trends are believed to play a serious role in shaping the future of banking and finance, in India and elsewhere too.

1. Rise of Cryptocurrency and the Prevalence of Blockchain:

Blockchain is a technology that relies on a global network to jointly manage a shared database that records transactions on a public ledger. It is renowned for its robust security. One of the most important features of cryptocurrencies is that they rely on blockchain technology. In this, Bookkeeping transactions are separated into encrypted packets, called blocks which are at that point added to the “chain” of computer code and encoded for upgraded cybersecurity.

2. Artificial Intelligence Will Keep Progressing

Embracing Artificial Intelligence technology would enhance the capability of Banks to offer better and more accounting in real-time with charts and reports with just one click. Everybody likes to have instant results, and certainly not after a week-long or month of wait.

Although chatbots are the hot and latest developments in the banking system, which is replacing the old customer service in the banking industry with its machanised voice. Artificial Intelligence (AI) shall remain at the top of a confluence of technologies like the Internet of Things (IoT), Data Science, Natural Language Programming (NLP), Optical Character Recognition (OCR), and Blockchain that will lead the architectural evolution in the way banking sectors work.

3. Remote banking solutions to remain mainstay delivery channel

The rapid rise in internet services and the increasing propensity of consumers to use internet and mobile applications for carrying out transactions has made next-generation remote banking solutions a key priority area for banks. With the surge in mobile banking, the idea that “more branches = higher profitability” no longer remain valid. The bank branch is no longer the only, or even the primary, way that customers can interact with their bank. Netbanking and Mobile banking will incorporate, customer-to-customer one-click payments, the consumer-to-business effortless digital banking system, password-free biometrics, new cryptocurrency opportunities, locational administrations and offers, and conversational interfaces.

Many banks are making huge investments in online and mobile channels. With the growth of smartphones equipped with browsers, a large potential has emerged for their use as a virtual wallet. Smartphones can perform the functions of cash, checks, debit, and credit cards in addition to other features such as an address book and a calendar. The trend towards enhancement of multichannel capabilities is also driven by the desire of banks to tackle competition by enhancing all customer touch points including internet and mobile banking, call centers, and ATMs.

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