With key, sophisticated developments in artificial intelligence (AI), cloud computing, robots, application programming interfaces (APIs), and cybersecurity, financial institutions can make new products and services, improve customer experiences, and save millions of dollars.
Digital banking, the advent of new technologies provided by high-profile corporations like JFrog, the blurring of industrial ecosystems, and an emphasis on innovation all offer challenges and opportunities for banking. People are turning to financial technology solutions and giant internet platforms instead of saving, borrowing, making payments, and investing.
To stay competitive, commercial, financial institutions, such as banks and credit unions, must shift their mindset from one focused on the items they offer to one focused on the needs of their clients. The following are the trends that you should keep an eye on.
1. Smart Communication and Decision Making
Data, artificial intelligence, and analytics have never been more important. Data, intelligence, and analytics should be used to identify opportunities, accelerate innovation, expand options, and improve contextual communications. This will only be done with people but instead with them.
AI and robust analytic algorithms can reveal what is happening, why, and what will happen next. This allows employees to improve back-office procedures, save costs, save time, and improve customer service, loyalty, and income. This is faster than ever, providing flexibility and agility in volatile times.
2. Open Banking API Growth
Open banking is a significant driver of the digital banking transformation, involving investments in technology and infrastructure, data modernization and decentralization initiatives, fintech alliances, and reskilling programs. The results of the Digital Banking Report show that clients will benefit from these initiatives.
To prepare for this transformation, financial institutions such as banks and credit unions must assess which of their business models is most suited to accomplish their long-term goals. The next step is for institutions to determine if they can use the model and deal with third-party providers to work together.
3. Cloud Migration
Because of the complexity required and concerns about security, risk, governance, and control, most banks and organizations that offer financial services have yet to migrate their critical computer systems to the cloud.
Financial organizations such as banks and credit unions must use cloud computing for data storage and analytics to meet capacity and speed needs. This improves consumer insights, efficiency, innovation, agility, business continuity, and security. Cloud computing technology could make people more productive and give them information that could help improve the transformation of both front and back offices.
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4. Intelligent Process Automation
According to McKinsey, next-generation process automation and virtualization will have automated half of all human labor employment by the end of the next few decades. McKinsey predicts that there will be 50 billion Internet of Things devices by 2025. Due to robotics, automation, and 3D printing advancements, 79.4 zettabytes of new data will be generated each year, and this leads to enhanced efficiency and better data for decision-making.
Financial companies such as banks and credit unions understand that offering an excellent digital client experience necessitates a mainly digital back-office. This includes establishing accounts, onboarding new staff, and completing loan application administration more swiftly.
5. Embedded Banking Becomes Embedded Finance
Thanks to integrated banking, users may make deposits, save, make payments, and borrow money inside the same non-financial app. Businesses that are not financial institutions have the opportunity to retain consumers and expand the value of their relationships. According to McKinsey, retail, telecoms, large technology and software businesses, vehicle manufacturers, insurance providers, and logistics organizations are on the cusp of delivering integrated financial services to serve corporate and consumer groups.
The world’s biggest financial institutions are developing relationships with fintech startups and other sorts of companies to provide banking-as-a-service (BaaS). Embedded finance has the potential to disrupt established banking practices and client connections while also presenting a $230 billion commercial opportunity.
6. Paying More Attention to Cybersecurity
Cyber risks have an impact on the reputations of financial businesses as well as their future economic prospects. The usage of mobile technology and the transmission of data over the internet both increase the possibility of being attacked by hackers.
Although there was an increase in cyber hazards in the early days of the epidemic, the true extent of the harm was not evident until financial institutions rushed to establish remote working and digital banking transformation programs. SolarWinds, JBS Foods, and Kaseya all uncovered once-in-a-decade security flaws. Protecting consumer data and key infrastructure from hacking is a challenging but necessary undertaking.
Passwords may become outdated soon. A person cannot develop and recall thousands, if not hundreds, of unique character combinations.
Passwords are becoming less necessary thanks to authentication applications, Windows Hello, and SSO. Microsoft’s Authenticator tool eliminates the need for passwords. While biomechanics will not be able to completely stop cyber criminals, they will add an extra layer of defense.