Over the previous few decades, digital transformation has altered how we speak, listen, buy, and conduct business. Emerging technologies have continuously changed how people interact with their money, what they anticipate from financial institutions, and how those businesses run. Modern processes are simplified, made more effective, mistake rates are decreased, communication is improved, and consumer perceptions of and interactions with money are altered.
With the introduction of cutting-edge technology including applications of artificial intelligence (AI), machine learning (ML), blockchain, and robotics, the banking sector in India is prepared for a transformative space.
Future of Retail Banking
Technology targeted toward enhancing the operational effectiveness of retail banks is having a favorable market impact. Insider Intelligence reports that 39% of retail banking executives believe cost-cutting is where technology has the biggest influence, as opposed to 24% who believe it has the largest impact on improving customer experience.
To stay competitive, retail banks are introducing platforms in the Banking-as-a-Service (BaaS) sector. For instance, UK neobank Starling formerly only provided business-to-consumer (B2C) retail banking services; but, after introducing a BaaS platform, Starling expanded its product offering and revenue sources, assisting it in staying competitive in the neo-bank market.
Popular Trends in Emerging Technologies in the Financial Sector
If they haven't already, anticipate these upcoming technological trends for financial services to be incorporated into your institution's technology stack.
Banks' Digital Experience Platforms
Although digital experience platforms are nothing new, contemporary technologies are enabling financial institutions to change a field that is still developing in the financial services industry. For instance, hybrid cloud (cloud/server) solutions offer customers accessibility and privacy. Additionally, hybrid platforms enable real-time intelligent data integration for advanced analytics, personalization, and digitization.
The introduction of API platforms, where users may link their financial data to other apps and vice versa, is among the most significant of these advancements. Many financial institutions have opposed API, but as a result of EU regulations requiring businesses to provide open API, many U.S.-based businesses are now doing the same. Consumers can benefit from open banking in many ways, including by sharing information with third-party budgeting applications and using money-management tools, which enables smaller financial institutions that cannot afford to provide these services directly to customers to do so.
Blockchain development is a new financial services technology trend that is revolutionizing the financial world as we know it, although its adoption of it is still somewhat slow. The technology that underpins Bitcoin, known as the blockchain, has been adopted by major financial institutions like JP Morgan Chase and is viewed as one of the biggest opportunities available to banks and other financial institutions right now. For instance, Accenture predicts that shifting clearing and settlement procedures to the blockchain could save investment banks $10 billion.
Robotic Process Automation:
With the growth of the digital economy, the amount of unstructured data that banks must process is increasing quickly. These include more than simply financial transaction information; they also include additional behavioral information that could help banks enhance and reinvent the customer experience. Bankers can now comprehend consumer decisions at a higher speed, scale, and quality thanks to a mix of multiple technologies that enable cognitive and robotic process automation. Additionally, today's sophisticated virtual assistants manage transactions, deliver crucial information, and advise clients.
By enabling bots to complete repetitive activities without human involvement, robotic process automation is enhancing the user experience. Additionally, it lowers errors, enables bank employees to manage trickier inquiries, and improves customer service.
Cloud computing is another digital transformation that is shaping the financial sector. Banks can access new business prospects and delivery channels by utilizing the cloud, which is a key component of the service delivery model. Banks can lower data storage costs by reducing capital and operating expenses while preserving the security of consumer data through cloud-based services. Cloud computing also encourages secure digital money transfers, wallet payments, and other forms of online payment.
Chatbots and Artificial Intelligence
The digital transformation of banking increasingly includes chatbots and other AI-based tools. They are used by financial organizations of all sizes, ranging from big banks to tiny credit unions, and are quite popular. Artificial intelligence (AI) affects back-office operations, product delivery, risk management, marketing, and security, while chatbots are its most widely known application. Simple algorithms are used by machines to handle tasks like data input, risk assessment, and loan form processing, saving major banks hundreds of thousands of employee hours.
Smaller banks can easily access these cutting-edge financial services technologies, which include solutions to automate certain tasks like documentation, data exchange, data analysis, customer communication, and much more.
Automation in Financial Services
The most popular technology for automation, known as robotic process automation, or RPA, simply automates fixed and repeated procedures. Automation, as opposed to AI, uses a straightforward set of principles (If this Equals then that) to provide relatively straightforward but trustworthy outputs. These pre-programmed rules can apply to unstructured data (forms filled out by hand) or structured data (incoming data on interest charts) to handle digitization, approval, risk flagging, and other processes. Many also incorporate learning patterns, which allows them to get better over time based on growing data volumes.
Are You Ready to Embrace the Trend?
While creating chatbots, experience portals, or a blockchain system from scratch would be ineffective and expensive, banks of all sizes are increasingly able to access this cutting-edge financial services technology. Financial institutions can rent and customize apps, chatbots, and other solutions that would normally require years to produce to any standard of quality thanks to the work of digital experience platforms and developers that create solutions with them in mind.
In conclusion, FSI businesses need to be prepared because the financial sector has been sluggish to adapt to the digital world. However, unprecedented change is expected in the next years. Organizations will need to modernize their outdated infrastructure and adopt multi-cloud technology to enable flexible, innovative business models.