The unforeseen pandemic has forced people to change their fundamental lifestyle and the way they interact with the outside world. This shift has accelerated an already gradually shape-shifting phase of digitalization. It has its arms widespread into almost every industry with Banking sector as no excuse.
In order to survive the battleships of prohibited physical interactions, banks and credit unions had to resort to digital means to let the customers transact without the need of going to the bank. Instead of trying to change the entire landscape of banking and financial services, institutions resorted to the quickest possible update on the technological front to keep up with the rising requirements.
As an effort to adapt to the new normal created by the crisis unforeseen on any organisation’s radar, banks have incorporated the latest tech and digital leaps into their functioning. As we enter into 2021, banks and financial institutions have to maintain these adaptations to explore the new definition of digitalisation fulfilling the customer requirements. Few of the trends that can dominate 2021 are:
According to a recent stats report, around $15.4 million of the banking share as gone into investing to include digital capabilities in the banking systems This further states that in the year 2019 mobile banking was a top priority for the banks in the year 2019 and has been predicted to hit $1.82 billion by the year 2026. These figures show the gradual trend happening to include the digital capabilities into the banking system even before the pandemic started.
However, with the ongoing health and safety concerns, banks have adapted these methods at a much quicker pace to ensure their customers safety. Along with these adaptations came in the new banking structure which is completely digital without the presence of any physical branches. These banks completely function through the digital means through online transfers, mobile banking and AI powered interactions.
These institutions also guarantee better revenues because of the absence of the need to visit the branch, long queues and hectic paperwork. On the business front, a prospective fortune can be saved owing to the needlessness to maintain the facilities at the branches, low cost and overhead expenses etc.
The new banking landscape would therefore probably be dominated by mobile wallets, AI, branchless banking solutions and other forms of digital banking. Virtual banking experiences powered by Virtual Reality (VR) and Augmented Reality (AR) are also pegged to be a possible option with various international banks piloting this experience with their customers.
While digital banking has taken over physical bank branches for most transaction-related activities, in new geographies such as tier 2 & tier 3 locations in India & South East Asia where banking penetration is still low, Banks are now leveraging AI-powered digital kiosks to serve as a Branch in a Box. A Relatively new concept but one that has found significant traction among customers. Since customers are very familiar with ATM banking for cash withdrawals and deposits etc, most banks are now leveraging this trend to aid their financial inclusion initiatives.
These new generation kiosks are interactive, can be powered by a virtual avatar that can interact with customers via speech, and has powerful APIs that integrate with core banking systems enabling customers to conduct all transactions that one can do in a physical bank branch. This significantly reduces the capital and operational expense of setting up a full-fledged branch and enables banks to create Digi-branches.
E-Lobbies are also becoming a common mode of digital banking that is replacing a physical branch or reducing human operations in a physical branch, where customers are encouraged to use digital kiosks to conduct most transactions. These transactions can either be assisted by a bank rep or by a virtual avatar.
Almost every bank is exploring blockchain technology for its cost-saving and efficiency-enhancing capabilities. Banks are exploring various avenues of including it into their landscapes right from creating their own in-house solutions to partnering with the fintech and the Digitech firms. Most of these banks aim to streamline their process using this technology thereby enabling them to cut costs.
However, a few of them are also developing new business models based on these technologies to gain an edge over the existing competition. According to recent statistics, around 69 percent of banks are already experimenting with blockchain to leverage various factors and advantages ensured through its inclusion. Around 50% of bank executives have also admitted their inclination towards believing blockchain and AI will impact the banking sector the greatest in the coming years.
Although every industry has been shifting towards cloud computing for the past few years, the shift has been a lot slower in the banking sector owing to rigid security and confidentiality issues. With the sudden outburst in the data to be handled due to the major shift to digitalization, banks will probably have to pace up their run towards cloud computing to ensure smooth functioning. However, the banks are now also framing various guidelines to ensure safety to the privacy and security of the customers while quickly adapting to the cloud functioning.
Daniel Newman from Forbes has also backed this trend through his statement “The widespread, sudden disruptions caused by the coronavirus have highlighted the value of having as agile and adaptable a cloud infrastructure as you can — especially as we are seeing companies around the world expedite investments in cloud to enable faster change in moments of uncertainty and disruption like we faced in 2020”.
Owing to the possibility of a fall in revenue in the post-pandemic economy, banks are placing their bets in automation and robotics to increase efficiency and accuracy. On similar lines like cloud computing, automation also gains a flux in the movement due to the investors who are completely inclined to integrate the latest cost-effective and scalable solutions.
Gartner has released a forecast recently which predicted that in spite of the economic lag caused due to the pandemic, Robotic Process Automation is still expected to grow at a double-digit rate by 2024.
With the data being digitized much quicker than ever before, banks have to frame up new guidelines and firewalls to safeguard the information of the customers. While almost all the banks are aiming to enhance the customer experience, most of them are also backing up on the improvement of the security of the stored information to parallelly assure the protection to the customers.
Financial industries and banks have been relying on AI to optimize and personalise their processes. It was already integrated to enhance customer experience in the form of chatbots and avatars. With the analysis of the data available as an attempt to provide predictive personalisation, AI has been stemming as the most reliant option for the financial and banking sectors.
According to a recent survey by Accenture, around 50% of the customers admitted abandoning a website when it wasn’t personalized and around 90% mentioned sticking to a brand they believed understood and rewarded them.Banking sector is now focussing to revolutionise the method of monetary interaction of the customers through the use of AI to personalize the experience through credit decisions, KYC, personalised banking, detecting frauds, risk management etc to provide security coupled with convenience.
According to a recent survey of 300 executives from the financial sector, around 60% of the respondents replied that their financial companies have been deploying AI to improve their process optimisation. With the precise and accurate services offered by AI, it only seems plausible to expect a rising tide of it in the banking sector.For the banks to move towards completely digitisation and automation, every single aspect of the organisation needs to be well coordinated and organised.
With the banks already heading towards a common destination, the only way to ensure success and efficiency is to carefully coordinate their steps learning from the experiences of competitors as well companions. While the trends always keep fluctuating, the only way to enhance customer experience is to optimize the interaction keeping in mind the brand communication and the consumer expectations.