How banking industry can bring technology innovation across all functions
Few days ago, I was reading through an article published by John Lyons, Dr. Philipp Wackerbeck and Daniel Zeiter emphasizes how Banks are now competing with nimble tech innovators with lower costs and appealing products and can no longer take their customers’ loyalty for granted.
Traditional banks are running out of time. These corporations dwarf the biggest global banks in terms of spending power and market capitalization are now competing with smaller FinTech firms who are able to offer more competitive solutions quickly. These firms offer affordable access to more recent cloud-based technologies, and they are creating cutting-edge, better methods to some of the problems that traditional banks find expensive to solve and cause friction in the digital experiences of their customers.
Market disruptors can effectively compete against the greater but less efficient incumbents due to their speed and adaptability. The reality is that conventional banks risk an uncertain future if they do not adapt to this new competition. Banks now need to prioritize in order to have an edge over these FinTech’s if they want to sustain themselves within this dynamic market.
Some Innovations that can deliver more value and bring tech innovation
The average consumer is accustomed to instantaneous digital products, and they expect no less when using their money. In order to satisfy these demands, banks are offering real-time, practical, and simple fast payment systems. An instant payment occurs when funds are electronically transferred between two accounts in a matter of seconds as opposed to the typical 1-3 business days. The successful completion of the transaction is nearly instantly communicated to the payer and payee (by SMS, mail, push notification, or other means).
Several instances where fast payments can make life simpler for both payers and payees include splitting the check with friends at a restaurant, peer-to-peer money transfers, online shopping, and purchasing movie tickets, etc. The growth of a bank will depend on its capacity to create and take part in digital ecosystems in this highly connected society. The bank's capacity to integrate its offerings with multiple external and internal third-party services and applications is a crucial need.
Nowadays, customers don’t have time or patience to visit the branches and wait in que to fill in tons of documents to get their task done, they would rather like to have a self-service digital solution which is reliable, efficient and low-effort. Banks should offer solutions like, online account opening, loan request and disbursement, forex trading, stock market trading, etc.
Banks should also equip themselves to provide solutions those are available to users at any time, from anywhere - quick, simple, and transparent. Bank should devise such processes such as KYC compliance, Real-time ID verification, Account Maintenance, Device verification, Facial and fingerprint biometrics, Omnichannel capability (in-branch, mobile app, website), Instant approvals, Interactive forms, eSignatures and others. Any digital process should be designed to go beyond the form fill and ensure a frictionless customer journey across channels.
Customers expect the highest level of security and protection from banks since they trust them with their personal information. Financial institutions can balance security, speed, and convenience for a seamless client experience thanks to biometric technologies. Biometric identifiers are significantly harder to steal and are impossible to lose or forget than PINs or passwords. Nearly 2.6 billion people will use biometric payment methods by 2023 as a result of the demand for an easy and secure authentication process. Biometric technology should provide a consistent, superior customer experience across all types of payment channels, from smartphones and ATMs to smart home devices, with its ease of use and accessibility.
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Banking as a Service (BaaS)
BaaS is the provision of banking products and services through third-party distributors. BaaS products are enabling new, customized offers and accelerating their time to market by combining non-banking enterprises with regulated financial infrastructure. BaaS offerings are quickly gaining ground as consumer discontent with current offerings rises.
BaaS providers are focusing primarily on just one or two stages of the value chain, as compared to traditional banks who owned the full value chain. Successful BaaS players nowadays tend to following patterns, using aggregators, other banks, and non-financial businesses, providers make their banking license or technology available (NFCs). In addition to acting as providers, providers-aggregators combine their own capabilities with those of other suppliers to create a comprehensive "out-of-the-box" solution. Distributors use their connections with end customers to offer distinctive financial service offerings. Distributor-aggregators improve the offerings they offer by including fresh goods or cutting-edge technologies from various suppliers.
The emergence of these players has created a void for Banks and customers are moving towards these services as they provide better solutions compared to traditional banks where the customer is trapped into several processes whereas these services are quick, reliable and deliver higher value.
The Future of Banking
To be successful, the bank of the future will need to embrace emerging technology, remain flexible to adopt evolving business models, and put customers at the center of every strategy. Learn how we can help you transform boldly. The future of banking will look very different from today. Faced with changing consumer expectations, emerging technologies, and new business models, banks will need to start putting strategies in place now to help them prepare for banking in 2030. Explore eight key trends below that are changing the banking landscape.
Digital transformation might be the buzzword of the day, but for banks it can be a critical imperative to succeed in a changing business environment. While many banks are experimenting with digital, most have yet to make consistent, sustained, and bold moves toward thorough, technology-enabled transformation. Technology will continue to be the driver of business growth and central to delivering a wide range of services through strong customer experience.
What will the future work and workforce look like? Financial institutions are embracing new technologies and investing heavily in digital transformation initiatives. Automation and artificial intelligence are replacing human thinking and urging institutions to revisit their talent landscape and the skills required to stay ahead of the curve. Additionally, trends such as the gig economy and crowdsourcing are changing the way work is done.