The Future of Banking
Finance is being taken over by tech. Advances in technology are quickly transforming the industry, and may ultimately change the face of world finance as we know it. Banks and insurers used to have less motivation to push boundaries, as the highly profitable, relatively static business models they adopted worked so well.
Today, however, leaders of the industry who had achieved excellent results and brought advanced experience into the financial and business world are being confronted by a new wind of technologies that may disrupt their markets. Peer-to-peer lenders, crowdfunding, bitcoin, mobile payments, robo advisers, etc., are bringing about rapid liberalizing of finance and trade.
The current situation and forces have led to questions being asked about the future of finance. Unless the big names of financial services rethink their business models in some very fundamental ways, they may find themselves losing market share to today’s ever-aggressive innovators. These innovators have come up with ways to offer better products than traditional financial organizations as you would see below.
Modern Technology Use Cases in Financial Services
Technology is driving innovation in the world of finance in several ways. These include:
- Remittance: This is one of the problem areas for conventional financial institutions. Cross-border payments have traditionally been a slow and expensive process, with some transfers taking up to three days to arrive. The blockchain enables innovators to challenge this process by significantly speeding up confirmation times and simplifying the payment process, all while reducing costs. Blockchain also enhances transparency in the financial industry. This helps to minimize risk and human errors.
- Chatbots and Customer Service: Another issue that customers often face with traditional financial institutions is that they offer poor customer experience. Chatbots help to correct this, thereby improving client satisfaction and lowering cost.
- Machine Learning, Artificial Intelligence, and Fraud Detection: Machine learning and artificial intelligence make fraud detection easier, as they help enhance efficiency through the mining of unstructured transaction and account information to give a 360-degree client view and facilitate faster transaction authentication.
How Traditional Financial Institutions Can Prepare for the Future
If the aforementioned disruptive technologies are an indication of things to come, then financial institutions must make efforts to move with the times by generating more innovative ideas to take their business forward. This can be done by:
- Embracing technology: To ensure continued success, banks will have to adopt technology to keep up with the rapid shift in digital economics. Unless banks train staff on the use of and invest in tech, they may find themselves lagging behind their non-bank competitors in the foreseeable future.
- Adopting blockchain: Financial institutions should look to take advantage of blockchain if they aim to provide customers with quicker and inexpensive ways to transact.
- Staying social: Banks can improve customer satisfaction by not only providing engaging content but also by providing customers with several platforms with which to contact them and respond promptly to inquiries.