Industries of all shapes and sizes have been expected to embrace technology and modify their approaches in recent years. From manufacturing and production-based businesses leveraging technology to create added efficiency to consumer-facing businesses revamping their processes to meet the expectations of today’s consumers, our world today thrives on technology. Businesses who fail to embrace it and make the relevant changes will quickly fall to the wayside.
In banking, too, the importance of technology has never been greater. With increasing competition and the aforementioned consumer expectations, banks and credit unions will have no choice but to embrace new technologies if they want to have any chance at survival.
Technology is changing banking in 2019 and beyond
This year and for the foreseeable future, banking institutions, whether traditional or online, will need to step up their game.
- Today’s financial consumers demand personalization – Just as consumers want personalization in their shopping experience, they also want it in their banking experience. Consumers want to know that their bank is paying attention and is ready to provide recommended products and services that could bring them a benefit. And even more so, they want the bank to provide these recommendations without the customer needing to ask for them. Leveraging artificial intelligence and customer data, today’s banks can truly transform the customer experience.
- Today’s customers don’t want to go to the bank physically – People today are busier than ever. The entire notion of having to get in your car, go to a bank, wait in line, and then get the service you need is not only inconvenient but is also highly unnecessary to many customers. Digital banking is more and more common and will continue to be more so in the future. Most of the popular banking services like lending is becoming digitalized because of the tough and extraordinary customer experience from new era online alternative lending service. And, customers today, especially millennials and the generations to follow, are expected to willingly provide their personal information in exchange for a digital banking experience. If they can’t get what they want from one online financial institution, they’ll simply move on to the next.
- Modern customers want to know that their data is safe and secure – Though these consumers will more willingly provide their personal information than those in previous generations, they will also demand the peace of mind knowing that what they share is well protected. Banks will need to become more proactive in how they handle data protection and the management of cybersecurity risks. Consumers today want both ease of use and increased protection of data and identity, and that means that the banking industry will be forced to bring on measures such as multi-factor authentication, secure applications, digital signatures, biometrics, and more.
- Customers want cloud-based solutions – The momentum in banking focused on cloud-based solutions occurs because today’s financial institutions are currently relying on legacy infrastructure that just cannot compete against the faster and more-innovative digital competitors. Thankfully, this is one thing that most financial institutions seem to agree on. The majority of bankers agree that implementing cloud technology will automate operations and workflows, which will bring improved efficiency, as well as security and cost savings.
- The intelligent agent is a lucrative proposition – Most banks are now moving from basic dialogue and account inquiries to conducting transactions through voice commands. These voice command options will also make it possible to execute payments, conduct account transfers, and establish account alerts. And, this trend will simply increase over time, as it is anticipated that in just five years, over half of all bank transactions and interactions will be conducted through voice-first devices capabilities.
- Big tech firms are taking on banking capabilities – A high percentage of millennials, as well as generations on either side, are becoming more and more open to conducting their banking through big-tech firms such as Amazon, Google, Apple, and others. While this wasn’t even a fleeting thought just a few years ago, these big-tech players are proving that they have the chops to change the future of banking, and soon.
- The role of blockchain – If you have been following the financial industry over the last decade, you are probably already quite familiar with the concept of blockchain, which is the record-keeping technology behind bitcoin. And while the focus of blockchain implementations has centered on process simplification and cost reduction, the incorporation of blockchain for other purposes will continue to grow.
Banking is undergoing a digital transformation
Like most businesses, banks are shifting from a product focus to a customer focus. Though it has perhaps taken the financial world a bit longer than other industries to develop more customer-centric models, they are quickly catching up. As part of this customer-centric initiative, bankers are working to earn and maintain the trust of their customers.
Despite the concerns of data breaches, consumers are willing to share their information to create a more seamless transaction. Therefore, banks are working hard to move past the headlines of these recent breaches and are implementing new ways to meet those customer expectations without adding fuel to the fire.
As bankers collect more and more information digitally, ensuring the security of that data is critical. Though the stakes are high thanks to regulations like General Data Protection Regulation (GDPR), today’s customers lack the blind loyalty that was so prevalent in the past. Consumers will switch to another bank if their trust is broken, or if their bank can’t provide the ease that they are looking for. And, with customers being as digitally savvy as they are today, the switch will often happen long before the banks have even realized that they have lost a customer. This is unfortunate as the loss of just one large customer or a hundred smaller ones can be enough for a bank to plummet in profitability.
It’s clear that through the rest of 2019 and for the years to come, banks will continue to not only fully embrace digital transformation but will also try to become leaders within the digital realm. Though there’s no shortage of role models to follow in other industries, banks will need to dig deep to tear apart the processes that built the entire foundation of our financial institutions so that they can rebuild and create a cornerstone for what digital transformation will look like in the future.
More on this topic: How FinTech Promises To Make Banking Faster & Easier