The year 2018 has been a remarkable year for the banking sector. With the present government implementing reforms like Demonetization and Digital India, changes in the financial sector and technological advances are massive.
Fintech Companies and Banks are constantly adopting newer technologies, providing better digital experience to customers, enhancing data analytics and reporting capabilities as well as automating the core business processes. Listed below are the top technologies that will define the future of banking industry in the years to come.
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With advancement in technology, banks will slowly adopt machine learning tools and techniques. Machine learning is the subset of artificial intelligence or AI. Machine learning is a set of statistical tools to learn from data trends, without necessarily being programmed. Machine learning will help get insights from various data points employed to collect customer’s profile and transaction behavior. These insights provide analyzed data that predicts the needs of the user and helps banks design and adopt technologies as per customer needs. There are several innovations on customer interfaces through use of multilingual text and voice processes.
With the rise in technological innovation across various sectors, the banks and Fintech Companies have also adopted analytics of things or AOT, which helps banks and other lending institutes, analyze customer interactions with various devices on IOT (Internet of Things) and use this information for enhancing customer experience.
The peer to peer lending framework is well established, with various Fintech Companies and start-ups offering the facility online.
The different alternate lending platforms are:
Bank statements and salary slips remain the most crucial factors considered in sanctioning loans. But, the hundreds of alternative data points fed into risk analytics software developed by new-age lending companies are also significantly shaping an individual’s credit score. These data points keep growing and getting embedded deeper into a person’s life, spanning across everything from political affiliations to the friends list.
Banks are using chatbots in the past few years, mainly to streamline the process of providing information and facilitate easy and efficient transactions and services to users. With further innovation, chatbots will be used across India, eventually providing better quality of interaction and are likely to transform into personal financial assistants. This helps increase awareness and knowledge among users and aids customers make informed financial decisions.
Robotic process automation (RAP) is the process of automating some basic clerical operations in a business, based on software robots or artificial intelligence. RPA is emerging at a rapid pace as a highly efficient tool to help financial institutions support their digital transformation initiatives. Over the next two years, bank operations will undergo automation through RPA which will drastically reduce operation time and bring about sizable improvement in customer services.
Banks would move to agile architecture and cloud based technologies to reduce various services, budgets and timelines. Agile architecture refers to a flexible, easily extended and easily evolved collection of structures and processes on which your organization is built. Agile architecture relates to a method of management, used especially for software development which is characterized by the division of tasks into short phases of work and frequent reassessment and adaptation of plans.
Adaptation of cloud based technologies in banking, increases along with the focus on security and regulatory compliance. Banks and credit unions will feel the push to create more cloud-enabled business models, while the use of open APIs will drive consumer applications to the cloud in greater numbers.
SEE ALSO: Robotic Process Automation
Open banking is a concept in the field of financial services, based on several principles and uses open APIs allowing third party developers, to develop software and applications built around the financial institute. Open banking increases financial transparency options for account holders enabling customer’s access bank data real time thereby enhancing customer experience. With time, more and more banks are moving towards API integration. Banks will continue to work on opening up APIs for businesses, offering enterprises a seamless banking experience. Banks with also partner with start-ups, Fintech Companies and online aggregators, providing banking services to various customer segments.
With the emergence of e-wallets, the payments space is slowly being taken up by Google, Flipkart and Amazon. These payment solutions provide enhanced features like chatbots along with e-commerce and banking services. Banks are also entering the online payments space by providing comprehensive solutions to customers, enabling them widen awareness on the payments market and e-wallets.
We see the gradual convergence of Fintech Companies and e-commerce companies, which aim to provide easy and hassle free payment solutions. With the entire financial industry shifting to digital channels, it will be interesting to see how the traditional banking system evolves, how they come up with innovative products to lure tech-savvy customers. Banks will have to improve digital offerings and extend reach across customers.
As the current governing regime moves into the last year of its term, implementation of Smart Cities could see heightened activity and 2019 could herald interesting times for connected payments and IoT.
With NITI Aayog focusing on setting up IndiaChain (A Blockchain Project), Banks could look for potential participation on this platform, making the KYC and documentation process, interoperable.
With the present government pressing for Digital India, we can see a rise in digital footprints of users at an unprecedented rate. With the rise in use of the internet for banking services, cyber security is one of the primary concerns for the banks. Hackers and criminals try to find loopholes in the system and attempt to breach the existing infrastructure. So, financial institutions will look for more secured tools and techniques to be implemented to protect the system and enable customers carry out transactions with minimum risk. With the implementation of Aadhaar, we already have our biometric details stored. Banks can use biometrics to reduce transaction risk and verify authenticity of customers.
The current government have taken certain steps to boost digital transactions. The RBI has brought several changes in the MDR rates for debit cards. MDR is the cost paid by merchants to the bank to receive payments digitally via credit/ debit card. The central banks have also adopted a differentiated MDR for QR code based transactions. This move by the central agencies will have a multiplier effect on the acceptance of digital payments solution especially by smaller businesses. This will help small business enterprises and also establish payment solutions.
With the emergence of technology and streamlined lending processes, banks will soon adopt certain in-house technologies, which will play a pivotal role in operations. For example a software/ bot employed to hire candidates for banks. This bot will help in the preliminary elimination process. This will reduce the time taken by employers to go through each candidates profile and qualifications. It may adopt measures like video resume software for automatic screening of candidates by bots, which will help in identifying certain pre-defined characteristic matches from video interviews submitted by the candidates.
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