As we draw close to almost two years of living in a pandemic, we have really learned to complete all our banking errands without having to go to physical branches. This has even let financial institutions realise the untapped potential and innumerable opportunities modern technologies can bring along with it.
Today, an influx of digital possibilities has swarmed the banking sector challenging its legacy systems to achieve efficiencies that can prove cost-saving and far-reaching. Consumers are increasingly adopting digital banking and turning to fintech solutions in search of relevant and speedy transactions with the United Payments Interface (UPI), mobile banking, and net banking.
Fidelity National Information Services (FIS) that works with 50 of the world’s largest banks revealed in a report that in 2020, there was a 200% jump in new mobile banking registrations in early April, while mobile banking traffic rose 85%.
In this frenetic pace of life, consumers are more inclined towards quicker services, that are speedily processed and the results are almost instant. For example, in the new normal world, we would even avoid completing KYC if that requires going to the physical branch of the bank when video KYC is being readily offered by Fintechs.
Simply put, instead of calling customers to their branches, Fintechs are meeting customers where they want to be. A new operational value of customer-centricity has emerged in recent times and it is not just here to stay but to be harnessed and applied by financial institutions, for them to compete in the long run.
As already a wave of adopting transformation among the financial institutions is prevalent, a large network of disruptive technologies like cloud computing, APIs, Artificial Intelligence/Machine Learning technologies, and blockchain are on their way to revolutionizing the banking sector. These technologies will empower banks to function with superior efficiency, agility, and never-before-seen- like capabilities.
In fact, about 32% of financial service providers are already using AI technologies like predictive analytics, voice recognition, among others, according to joint research conducted by the National Business Research Institute and Narrative Science. However, the digital adoption will require banks to reassess their core utility for this new era that will revolve around customer-centricity.
At some point, we all have ignored loan calls from banks as we weren’t looking out for loans at that point in time. The future in retail banking will combine cloud computing technologies with AI/ML to map out potential borrowers, eliminate biased lending driven by humans, and bring dexterity to the entire lending process.
AI/ML among other disruptive machinery is said to be far more promising for banks as its deployment will help in citing fraud mitigation, chatbots for customer service, and automated loan processing. According to Accenture, AI/ML techniques such as neural networks/deep learning have the potential to solve a wide spectrum of longstanding problems with a game-changing impact.
Financial institutions are known to have the richest data assets in terms of consumers’ financial standing and putting analytics, Big Data, and AI to good use will unlock insights, predict trends, mitigate risks and upgrade customer experience.
As the earlier concerns around cloud adoption with security, risk, and regulatory dissipate and more openness towards cloud adoption becomes a reality, banks and credit unions must turn to cloud computing solutions to improve efficiency, gain customer insights and bring unmatched agility to the whole process.
Cloud provides great value by turning unstructured data into structured data and banks should see this as an opportunity to upgrade their technology. It is imperative for banks to replace their legacy systems with outdated on-premise infrastructure that increases hurdles to upgrade and instead, establish a secure and scalable infrastructure to remain competitive in the future.
In fact, with cloud computing, banks will no longer need to keep banking programs and data locally as no physical infrastructure will be required eventually, leading to significant cost-savings by housing the cloud. These technologies empower banks of all sizes and scales to compete.
Banks will not just compete with banks outside the town or across the country but with the latest financial innovations presented from the likes of Silicon Valleys across the world. By leveraging its prime asset – data – banks can attain unmatched insights and growth. With disruptive technologies like 5G and AI/ML, banks have the potential to evolve into having a smarter presence than before.
Digital transformation is opening a new world of possibilities for corporates and financial institutions. Even though the pandemic has accelerated the transformation, the potential it brings to banks was always needed. Using technologies like AI/ML, cloud computing, and analytics, the banks of the future can make a quantum leap while protecting their operations, offering hyper-personalized services and scale-up customer engagement.
Disclaimer: The views expressed above are those of Abhishek Rungta, Founder & CEO, INT. Bfsinxt.com does not necessarily endorse it and will not be held liable for any direct or indirect damage made to any individual or organisation.