These 4 Digital Trends are Defining the Future of Banking
In the world of global banking, new technology is paving the way for rapid growth and scalability. Banks are seeking alternatives to traditional methods to stay relevant in the market, investing millions into digital solutions due to customer demands. Can these banks keep up with the increasing competition of financial technology in the finance sector?
Technology enables enterprises to be more agile and flexible, enabling banks to cater to the needs of a digitally-inclined audience. To put things into perspective, more than half of all banking transactions occurred within the branch network 15 years ago. Today, that number is down to less than 10%.
Banks around the world are seeing calmer waters thanks to the end of a years-long battle of intense scrutiny under new regulations. As a result, new capabilities are on the rise for banks to finally beat outdated legacy systems once and for all. Below, we’ll cover four digital trends innovating and defining the future of the banking industry:
The future of banking
- Biometric Authentication
With most FinTech analysts agreeing that the PIN feature will become a thing of the past, banks are turning to science for stricter security controls.
Biometrics is a form of measuring physical characteristics to verify one’s identity. Ways to do this include: voice, fingerprint patterns, facial recognition, retina or iris of the eye, vein infrared thermogram, or a combination of these. Thanks to the uniqueness of the data collected by this method, biometric authentication offers promising security.
With fraud on the rise, many financial institutions are pressured to deploy stronger security solutions. Biometrics is already being adopted by the world’s biggest banks to fight money laundering and other illicit transactions. For example, Wells Fargo’s CEO Mobile® solution allows customers to access their information all through their mobile app. Their biometrics eye-print feature is a hallmark of their increased security to the mobile platform. This feature allows users to sign in by scanning their eyes with their phone cameras, eliminating the need for a password or a token.
The result? Faster, more secure access.
- Robotic Process Automation (RPA) and Machine Learning for Workflow Automation
Robotic process automation (also known as RPA) refers to using software robots or similar virtual assistants to complete repetitive, labor-intensive tasks often referred to as “busywork.” Automating the workflow through RPA can save time spent on mundane administrative tasks like sending emails, opening applications, and copying and pasting information. These tasks are considered ideal for workflow automation. Executed correctly, RPA can drastically reduce manual labor and drive efficiency within an organization, leaving heavy and complex decision-making to humans. In banking, RPA can reduce the need for data reconciliation and transcription by up to 70%, according to The Lab Consulting.
Doug Shulman, Senior Executive Vice President at BNY Mellon, told American Banker Magazine, “If you think about smart automation, robotics is a piece, workflow is a piece, and we’re combining smart forms, optical character recognition, workflow and robotics to get momentum around automating tasks.”
In addition to RPA, machine learning has enabled more banks to automate workflow processes to create better banking solutions around the world. For example, banks can now mitigate risk for more accurate credit decision-making in seconds, compared to lengthy back-and-forth human processes like before. With algorithms, a bank can get a macro view of a customer and make a decision based on data quickly, reducing communication lag time between the bank and the customer. This intelligent process allows for more transactions, approvals, and access solutions to scale at large in greater volume, helping banks serve more customers than ever before.
(Photo by Karolina Grabowska from Pixabay)
- Open APIs
Open banking is making its way into banks all over the world. Financial institutions are fighting to be the end-to-end solution for customers’ financial needs, and many European banks have already prioritized customer-centric initiatives already.
APIs allow one piece of software to interact with another piece of software easily. With open banking, an open API can look at customers’ transaction data to identify the best financial products and services, like a new savings account with a better interest rate, or a different credit card with a lower interest rate. Through networked accounts, open banking can aid lenders to get a clearer picture of a consumer’s credit situation to assess risk more appropriately. On the customer side, customers can assess their own information easier before making a decision that could lead to more financial debt.
According to Retail Banker International, the traditional financial services industry grows more aware of how APIs can modernize the legacy era in a more effective way.
“The next phase of API development will focus on microservices or API-first banking capabilities that run independently from core banking systems. Micro-services will set banks up to facilitate a ‘pick-and-mix’ approach to their offerings, allowing them to be more aligned to their customer base. In time, such a model could renew the core banking system and change the banking IT function forever,” says Hans Tesselaar, Executive Director of BIAN.
- Data Mining
Data analytics allow banks and credit unions to better understand consumers, identify business opportunities and reduce expenses. Advanced analytics enable banks to better gauge loan defaults and find customers who are grossly underpaying, effectively repricing these often cross-sold products and services.
“Data mining can help banks and credit unions reinvent themselves as partners that offer highly tailored solutions to their clients, rather than suppliers trying to push products that might not match consumer needs,” says Boston Consulting Group.
Another added benefit is that financial institutions can leverage data mining to identify better prospects and create a more targeted client acquisition strategy. On the prospecting side, data mining can help prioritize leads and establish connections between current and potential clients. Behavioral analytics can then identify consumers who are a flight risk, helping to create individual action plans to retain these customers in the long run.
Banking will continue its greatest facelift yet.
The finance sector is seeing a radical transformation in 2019. Deloitte reports that “the economic fundamentals are strong, the regulatory climate is favorable, and transformation technologies are more readily accessible, powerful… than ever before.” Between artificial intelligence, open banking, Big Data, and biometric processing, banks are latching onto new technologies to stay relevant by the day.
Is your bank seeking new solutions to better serve your customers? Investing in workflow solutions that organize, streamline, and empower your personnel to realize new customer service opportunities is a great way to retain a competitive edge in today’s market. ProcessMaker specializes in providing results that drive revenue for banks seeking innovative alternatives. Learn more about our workflow solutions at www.processmaker.com.
ProcessMaker is an American international SaaS corporation headquartered in Raleigh-Durham, North Carolina. We provide total customer support, training, and professional services to larger enterprises requiring highly-customized workflow solutions with our Business Process Management (BPM) software. Our flagship Low-Code product is the preferred choice for our customers due to its deep customization ability with little programming knowledge needed, making Low-Code an easy-to-use solution among non-technical teams.