7 ways technology is impacting the banking industry

Technological innovation is driving genuine transformation in the banking industry, providing better efficiencies, customer experience, security and entirely new business models. Let’s take a look at seven key areas.

1. Automation is changing customer service

Specialist job boards are now listing positions within banking that work with AI applications and robotics. Automation is being used to optimise workflows and processes. Robots can be used to carry out low-value, routine tasks. 

Sophisticated algorithms can be used for fraud detection, and automation can aid functions such as digital marketing and customer service. As advances in this field continue, banks are expected to digitise more of their operations and use intelligent technologies to reduce fraud, waste, crime and human error. 

2. More significant numbers of challenger banks are appearing

There are a growing number of online-only challenger banks such as Smile in the UK and competition is continually intensifying. Younger customers, in particular, don’t feel tied to the established high street brands of old, especially with EU regulations in place that protect their deposits. 

Nowadays there are blockchain and cryptocurrency offers online too. Which combine traditional banking services with the ability to trade, store, convert and spend cryptocurrencies such as bitcoin. 

Traditional banks will no longer be able to rely upon their brands as a selling point, especially amongst a generation who grew up in the shadow of the credit crunch and who remember the fallout from the subsequent banking crisis.

3. Customers can now take charge of their data

GDPR in Europe has given customers the ability to control the use of their data in an unprecedented fashion. Firms are now obliged to clarify clearly and individually how they propose to use their customers’ data. Methods which fall outside of the bounds of consent are now in breach of the law. This has implications for the approaches taken by banks to market, cross-sell and expose their customer data to third parties, or even other parts of their umbrella organisations.

4. Fraud detection is becoming more sophisticated

With banking fraud on the rise, technological solutions are being deployed to stop hacker attacks as they occur. There is a multitude of diverse cyber attacks on financial institutions every day, from phishing scams through to malware attacks, trojans and identity theft. 

New software solutions are becoming sophisticated enough to stop these attacks and to prevent customers from losing their data and balances. This space alone is expected to grow exponentially, as cybercrime becomes more complex and widespread and as banks are forced to work harder to safeguard their customers and their operations.

5. Online banking will be ubiquitous

Banks are gearing up to attract Generation Z, and robo-advisors are everywhere, meaning that online banking is becoming more important as a differentiator for banking brands everywhere. Still, banks are responding accordingly and investing in their app services. Some challenger brands are focusing on their apps as their primary means of customer interface, recognising the ubiquity of the smartphone for their younger customers and a desire to bank on the go.

6. Online lending is getting faster

Technology is smoothing out the internal controls that define the speed of customer lending. Combined with regulations and processes such as faster payments, customers are now able to obtain credit quickly and smoothly, using entirely online means. The processes are quicker, and waste is eliminated. Additionally, digital application methods mean that updates and communications can be provided at all stages of the process to keep customers informed and engaged.

7. Communication is enhanced

Customers expect immediate, informed communication and the thought of queueing up to speak to someone in-branch is now untenable for many. That’s not to say that customers no longer want the option to see a branch manager or advisor in person, particularly for more complex products such as mortgages, but for most transactions, customers want to be able to message via online banking or apps. Live Chat is ideal, while telephone banking and online messaging are popular too.

In short, technology is transforming the banking industry for the better and bringing banking services to more people than ever before. Without the limitations of physical reach, banking services can be accessed by all. The customer is placed at the heart of the experience, owning their banking services in a way that has never been possible before and enjoying ever greater targeting and customisation around their needs.

Those banks that invest in digital solutions that allow their digital transformation to take place will be able to find their space within an increasingly competitive market and enjoy success in the longer-term. Banks that don’t may find that today’s customers, who lack brand loyalty and who are open to switching, may find better alternatives.

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