Change is the only constant today. What we’ve observed over the last few years is industries being shaken and reshaped by implementing various digital transformation strategies, customer relationships and experiences changed by disruptive technologies everyone’s talking about. In a banking, we’re witnessing another revolution in payments. China is confidently moving to become a cashless society. Already today AliPay and WeChat Pay are ranking as the top two preferred online payment methods in China. WeChat’s QR code or quick response scan or AliPay’s “pay with a smile” payment options at retail locations are making not only cash payments but traditional credit card transactions seem prehistoric. And in order to keep up with their customers, banks need to take note and get to grips with the latest tech trends. Below we took a detailed look at some of the most promising banking technology trends and tried to uncover how banks can make the most of them.
Experience Banking the New Way with AR/VR
Today it seems like AR and VR are at the forefront of customer experiences across all industries and banking is no exception of mobile technology trends.
Some of the banks are already in on a trend. Like National Bank of Oman that uses AR to help their customers locate the nearest ATM or find some offers and deals while shopping in a mall or down any street in Oman. In the meantime, BNP Paribas offers their clients VR experience that allows them to virtually access account activity and transaction records, or walk users through various and complex steps of a real estate purchase in virtual reality mode.
In 2018 Extended Reality (XR) that includes Augmented Reality (AR), Virtual Reality (VR) and Mixed Reality (MR) is one of the most promising technology trends in banking. According to this year’s survey, 45% of tech-savvy consumers want their banks to present new ways of communicating, like wearables or virtual reality. At the same time, 80 % of respondents believe it’s important to be a pioneer in XR solutions.
For banking AR/VR could mean higher workforce performance and more meaningful customer engagements. AR can help increase workers’ productivity by helping salespeople view and analyze large quantities of data faster, thanks to more intuitive AR interfaces. For customers, VR/AR technologies can redefine their relationships with banks and also serve as a time saver. This the growing popularity of online banking app and digital-only bank, eventually customers who can’t or don’t want to visit bank branches, won’t have to. For them, AR technologies will soon make it possible to have person-to-person virtual meetings with bank officers from the comfort of their home or any place in the world.
Considering the estimated growth of AR/VR market over the next couple of years, banking industry will have to keep up and get in on a trend that is a perfect way to engage, entertain and retain their customers.
AI as a Co-Worker
Artificial Intelligence is probably the most popular tech trend to be discussed in the banking industry and other financial sectors. It has been making headlines and stirring debates about its potential to cut countless jobs. Indeed, countless companies have been guilty of making shocking predictions about the number of its employees to be replaced by AI. Deutsche Bank chief executive went as far as to predict that half of the bank’s 98,000 staff will be replaced with robots.
Whether any of these predictions are anywhere near the reality only time will show. But today AI has made a very prominent place for itself in the banking industry. A recent survey shows that 79% of bankers believe that within the next two years AI will work alongside humans as a colleague, advisor, collaborator.
Collaborative robots or cobots that work alongside humans and help them perform their job quicker and better as well as guarantee the best possible service for customers is becoming a widespread practice. Back in 2016 Bank of America presented Erica, an intelligent virtual assistant that leverages predictive analytics and cognitive messaging to provide 24/7 assistance to the company’s over 45 million customers.
Chatbots and virtual assistants aside, banks can use customer profiling and algorithmic sorting to provide customized communications and decisions based on detailed customer profiles. AI can also streamline processes and be entrusted with some decision-making provided it has complete knowledge of regulations and laws. Generally, AI in the banking sector has the potential to cut costs and speed up the processes, as well as accelerate banking services.
Design Thinking to Understand What Customers Need
One of the latest trends in banking technology is Design Thinking. With numerous fintech startups popping each year, the banking industry has little choice but to adapt to the new startup culture and start thinking like one. That’s where Design Thinking can help.
Having little to do with only aesthetics, its focus is more on how the product works, helps customers and solves their problems. Design Thinking achieves its objectives by applying design principles to the way people interact with the world. The process involves trying to understand a customer’s behavior, a way of thinking and behaving (empathy) in order to get to the bottom of their problem and see if there’s a common issue among numerous users (definition). It allows total freedom for brainstorming (ideation) to see through feedback on your prototypes to see which of the crazy ideas work and which don’t (prototyping) and finally verify your assumptions with real people (testing).
Traditionally, banking hasn’t been exactly one of the industries to look at the product design and problem-solving from the customer’s perspective. Complicated online banking apps, frustrating online account opening process – all sound familiar to bank clients.
And Design Thinking can actually change that and get the innovation ball rolling by co-creating products with their customers to get their feedback quicker or hiring diverse teams to build more emphatic solutions.
Some of the banks are already successfully putting this idea into practice. Multinational Spanish banking group BBVA is spreading design thinking practices throughout the whole organization. They understand its value and the fact the most innovative products on the planet are created when design principles are a part of the organization a not just a department. They are promoting design thinking courses and training to encourage their employees to implement design principles into their everyday work. Their latest app was built with design thinking in mind, and the bank giant attributes app’s success to it. According to their data, new credit card applications went by 80%, account opening by 20%, and sales of investment funds by 50%, all after the redesigned app was released.
Data Veracity Is as Valuable as Ever
Big Data means big responsibility. The more businesses become data-driven, the more valuable it becomes for information to be accurate and untempered. It may compromise the decisions companies make or insights they rely on.
For the banking industry, where banks have traditionally possessed large amounts of important and confidential information about their clients, partners, services, data security is especially important. 84% of bankers that took Technology Vision survey concur that their organizations rely heavily on data to drive automated decision-making. At the same time, 77% of respondents note that most organizations are not ready to face the implications that come with corrupted insights, bad decisions, and possible compliance failures.
This means, that if banks want to build long-term, strong relationships with their clients, they require a level of trust. Some of this trust can be achieved through regulations like GDPR. But in order to truly succeed, gain their customers’ trust and respect, banks will have to go further and strengthen cybersecurity, involve technologies like blockchain to enhance transactional banking. These actions should be first of all with customers in mind, to show them that they are protecting their personal data and using it in customers’ best interest.
Blockchain to Change Legacy Banking
This wouldn’t have been a real banking technology trends overview without the most talked about, in the banking sector included, technology.
Blockchain has been stirring innovation across various industries and banking is no exception. Nine out of ten banking executives say that their bank is currently exploring blockchain use. Blockchain allows to track every transaction and provides accurate information from any point in the network. When fully adopted by banks, it will allow sufficiently quicker and accurate payment processing at the same time reducing its cost. And as the technology further develops and matures, it has the prospect to replace banks’ legacy systems in the future cost-effectively.
Banks are already expressing strong interest. Right now banking organizations are at the early stages of adoption, either focusing on developing their blockchain strategy or working on the proof-of-concept. Some of the banks are wasting no time. The Central Bank of India created a league out of firms that are responsible for 80% of financial transactions in the country and used blockchain for interbank transactions. By sharing distributed ledgers between institutions, banks can provide faster access to funds for their clients as well as more efficient processing and as a result, save some money for themselves.
Today’s banking technology trends show us that banks need to master how to best apply disruptive tech into their strategy in order to meet the growing need of their tech-savvy customers. Ultimately it’s the matter of winners who will learn to lead and adapt to new technologies and losers who will fail to digitally transform their institutions.
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