When thinking of organizations in the banking industry, do you view them as traditional and slow to change? In reality, businesses in the banking industry are among the first to adopt new digital transformation trends. It is predicted that 85% of banks will offer digital banking services by 2025 - up from just 60% in 2018. And the global digital banking market is expected to reach $27 trillion by 2023.
Among many technological implementations, mobile-based payments are just the beginning of the financial services industry's digital revolution. Customer service, wealth management, and fraud prevention are all facilitated by the use of AI. Blockchain technology is currently being used by certain financial organizations to increase financial security.
The growth of the Fintech sector is evidence of how technology has dominated the market. The foundation of banking and finance will be completely redesigned by 2025 thanks to innovations in cloud computing, blockchain, analytics, and robots, among other cutting-edge technologies. On top of intense competition and tight profit margins, innovation has become necessary to avoid disruption. Businesses that operate in the banking ecosystem can no longer be supported by outdated technologies and ineffective manual procedures. What are the key trends to watch out for and how precisely is digital transformation altering how organizations perform in the banking sector?
Among many technological implementations, mobile-based payments are just the beginning of the financial services industry's digital revolution. Customer service, wealth management, and fraud prevention are all facilitated by the use of AI. Blockchain technology is currently being used by certain financial organizations to increase financial security.
The growth of the Fintech sector is evidence of how technology has dominated the market. The foundation of banking and finance will be completely redesigned by 2025 thanks to innovations in cloud computing, blockchain, analytics, and robots, among other cutting-edge technologies. On top of intense competition and tight profit margins, innovation has become necessary to avoid disruption. Businesses that operate in the banking ecosystem can no longer be supported by outdated technologies and ineffective manual procedures. What are the key trends to watch out for and how precisely is digital transformation altering how organizations perform in the banking sector?
5 Digital Transformation Trends
To Monitor Closely In 2023
#1 - Paperless Transactions
Conventional manual processes are usually costly, sluggish, and inefficient. One of the major goals of an organization's digital transformation initiatives is to replace these internal systems with more effective paperless ones. Paperless transactions are not only more efficient, but they are also simpler to control. Your procedures will be much more efficient, and your record-keeping will be much better if you centralize all your processes and retain a digital record of all financial transactions. Services can then be easily tailored to each customer's specific demands compared to using a one-size-fits-all strategy.
#2 - Automation
Workflow automation is the process of developing a system where software intelligence carries out routine and repetitive operations, cutting down the cost of human labor. By establishing a workflow management system, organizations would streamline routine procedures, freeing up resources for more important tasks. This also frees up the time of human talents and their constraints, allowing them to focus on higher-level strategic planning. What this may translate to is a lower cost of service or higher margins for these organizations.
#3 - Digitization
In the current consumer environment, the digitalization of financial services has now been embraced by individuals of all ages. Customers can now easily open an online banking account without ever visiting a physical branch. Customers then can save time and energy on mundane tasks while also having the comfort of being able to monitor their accounts anytime and from anywhere with an internet connection. Banks likewise benefit from digitization since they will be better at managing customer records in one secure place, analyzing new data points such as spending habits and demographics to offer personalized financial opportunities, all while saving money by reducing the need for a full-fledged physical infrastructure for customers who prefer not to (or simply cannot) visit a branch. Therefore, it's no surprise that digitization has been reshaping the banking industry over the last few years and will likely continue doing so well into the future.
#4 - AI
AI-driven banking is quickly becoming the status quo, revolutionizing how traditional financial institutions serve customers and set up internal operations. For example, AI-powered chatbots are now being used to provide customer service at banking locations, answering basic inquiries in real-time. Additionally, banks can use big data analytics to better understand their customers’ spending habits and make personalized recommendations on services such as investments or loan consolidation. AI algorithms also help automate certain routine internal processes such as audit trails for fraud prevention and compliance with the ever-changing regulatory changes. AI would become a dominant force in the banking industry by creating new ways of doing business and offering improved user experiences with faster decision-making capabilities.
#5 - Cloud services
More and more companies that offer financial services are starting to move their operations to the cloud. This provides more scalability, making it simpler to meet rising client demand. Additionally, compared to current systems, they are easier to build and more secure. Along with these immediate advantages, many financial institutions view cloud services as a means of upholding their social and environmental governance commitments, particularly in terms of carbon reduction and sustainability.
Key Takeaways
A revolution is underway in the banking sector, and they would set the example by being leaders in digital transformation and impacting our everyday lives. The five trends mentioned would serve the overarching goals of the banking industry to provide more hyper-personalized customer service and improve security through fraud detection and digitization. This would also be matched with changing consumer behavior such as being more comfortable with using biometrics (such as fingerprint scanning) for authentication purposes. As experts predict that all cash could disappear within a generation as people move to digital payments, are you ready for this change and the exciting future of digital banking?
