How will Technology Shape the Future of Banking?
Technology has played a pivotal role in the growth of the banking sector, which was worth a staggering $644 billion in 2015, and it’s proving to be highly influential in the shaping of its future across the globe.
Introducing a More Intelligent and Secure Approach to Banking
From a customer’s perspective, banking has become an increasingly mobile and fluid service over the last decade. The rise of banking apps has driven this trend, with 40% of Brits now using their smartphones to access and manage their accounts. This has allowed banks to make real-time banking more accessible to their customers and allowed them to develop more intelligent and intuitive interfaces.
As a result, processes such as reviewing direct debits and issuing international payments have become far easier, with responsive user interfaces presenting financial data in a concise and easy to understand manner.
Mobile banking apps are also considerably safer than web browsers, thanks to the presence of in-built cryptographic hardware in smartphones and the two-factor authentication systems associated with numerous financial apps. These, combined with advanced SSL (secure sockets layer) encryption and the fact that smartphones tend to have one primary user, makesbanking apps far more secure than any previous technology.
Technological advancement has helped banks offer an increasingly personalised service and range of offers, thanks primarily to the fusion of big data and AI (artificial intelligence). These increasingly sophisticated technologies have been combined to help banks capture and organise huge swathes of data, laying the foundation for personalised products and adaptable payment models.
The utilisation of AI is especially important, as this offers access to the unstructured data sets that exist in customer forums and social media platforms. This represents the next generation of big data, and banks will soon be able to customise their products with greater flexibility and accuracy.
What About Blockchain?
The decentralised ledger technology that creates a comprehensive and immutable record of transactions is typically synonymous with cryptocurrencies such as bitcoin but it’s now being embraced by several large banks and could revolutionise the financial services industry in the future.
We’ve already seen banks leverage blockchain to reduce their costs and improve efficiency, for example, with Ripple’s innovative financial-settlement solution allowing institutions to transact directly with one another without excessive charges.
In the future, these savings and efficiencies could be shared with customers, creating a more accessible banking system that could bring opportunities, prosperity and greater equality todeveloping countries.
The Bottom Line
The traditional banking system has been revolutionised by technological advancement, with big data, AI and blockchain already providing more affordable and accessible services to customers.
This trend will only become more prevalent in the future, with blockchain ultimately capable of eradicating the barriers that have historically separated developing nations from access to core financial services.
Perhaps a more pertinent question is whether such technologies will have the same impact in the private lending sector, where the majority of firms continue to operate exclusively online and have yet to fully embrace blockchain.