Digitalization has significantly changed the image of the banking industry. Although it usually takes more time for financial institutions to adopt new technologies, the COVID-19 outbreak accelerated this process, making banks evolve to comply with growing customer demands. In the upcoming years, technological innovations will continue reshaping the digital banking industry. Thus, to stay competitive in the modern financial market, it’s crucial to keep up with the latest digital banking technology trends and adopt the ones that align best with your customer needs and business goals. Check out the top 5 that will dominate in 2021 in this article.
Automation plays a key role in digital banking transformation. New technological solutions, powered by Artificial Intelligence (AI) and Machine Learning (ML) help financial institutions to improve operational agility, increase overall efficiency, and deliver a greater customer experience.
By implementing automation, banks can eliminate repetitive administrative tasks, simplify and improve data analysis, risk assessment, verification, and other routine operations. Not only does it help bank employees to concentrate on more complex tasks and perform them more effectively, but also decreases the risk of human mistakes.
When it comes to customer experience, automation brings banking services to a new level:
- Customer onboarding. Traditional onboarding involves gathering, classification, and extracting large amounts of customer information. It is usually complicated, time-consuming, and vulnerable to clerical mistakes. Automation can streamline this process, making it more efficient and user-friendly.
- Payments and savings management. Not only do customers want to perform all the banking operations online, but also they want to shift this responsibility to their banks. A growing number of people are opting for “set it and forget it” logic in managing their payments and, especially, savings. According to the Chase study, 91% of their customers who are already using Autosave rate it as a convenient way to stay accountable. Thus, by adopting automation saving plans, banks can deliver a more convenient experience to their customers and best meet their growing demands.
Real-time payments (RTP) also known as immediate payments have received particular attention, especially during the coronavirus crisis. They provide customers with such features as immediate or close to immediate transactions, 24/7/365 availability, data-rich, and standardized messaging that contains all the relevant billing information.
Among RTP’s top benefits are seamless efficiency, high processing speed, and safety.
According to the research, in the US the total share of real-time transactions is predicted to reach one-fifth by 2024. While in Europe, all payment providers are to be included in the real-time payment system across the euro area by the end of 2021.
Although earlier this payment method was popular only among generation Z who was using it to pay the rent or split the bills, nowadays it is getting widespread also among older customers.
Personalization is not new but also a developing banking industry trend. According to the Capso research, 72% of respondents rated personalization in banking as “highly important”.
It’s a powerful tool that allows financial institutions to provide their customers with the most relevant products and services based on their personal data.
Many banking organizations consider enhanced data utilization only a marketing tool, however, personalization also improves customer-organization interaction. This way, the banks can use personal data and history not only to increase sales and marketing ROI, but also foresee customer needs and benefit from increased user engagement, improved customer experience, and, as a result, enhanced customer loyalty.
Expansion of Embedded Banking
Embedded finance is not a future digital banking trend, it’s already here. Some examples of its use cases include Uber, Shopify in collaboration with Stripe, digital wallets like Apple Pay, Google Pay, etc.
Although this banking model hasn’t received widespread adoption yet, according to the research, companies implementing embedded banking will gain a market cap of around $7 trillion by 2030.
Blockchain technology is becoming paramount in the digital banking sphere. The drive towards digitalization, on the one hand, has made banking operations easier, fostering enhanced customer experience, but, on the other hand, has significantly increased banking vulnerability to security threats and hacker attacks. Security issues in digital banking are commonly caused by inadequate authentication, insecure data storage, and others. Blockchain, due to its decentralized nature, can tackle the majority of them, making the banking & financial systems not only less vulnerable but also more transparent.
Apart from enhancing banking security, Blockchain technology can help to:
- increase transaction speed;
- eliminate human mistakes as the data can’t be removed from the blockchain;
- enhance efficiency;
- customize banking services and products;
The banking sphere has already entered the era of digital transformation. People and businesses prefer to collaborate with financial institutions that take advantage of new technologies and provide their customers with a seamless experience, personalized services, and a high level of security.
Thus, when going online or improving your existing banking business it’s crucial to collaborate with a banking software development company that follows the latest trends in the financial sphere. This way, you will be able to choose and implement the most suitable banking solutions that will help you retain and attract customers, increase profits, and stand out among market competitors.