Digitization has profoundly impacted core experiences like socialization, education, shopping, and entertainment. Ever slow on the uptake, the traditional banking sector wasn’t as keen to seize the opportunities for a long time. Not until FinTech startups, neo banks, blockchain, and other rapid developments upended the status quo and forced their hand.
What technologies are reshaping traditional banking, and how are yesterday’s behemoths adapting to today’s fast-paced digital environment? Join us as we dive into the transforming world of modern-day banking.
Shifting from Product-centric to Customer-centric Operations
The traditional brick-and-mortar banking institution operates on the assumption that customers who need financial services will seek it out and start using accounts, loans, and other general products the institution has created. The shift to online banking platforms, especially mobile banking apps, upends this practice.
Online banking lets customers review their finances, transfer funds, or get customer service whenever and wherever they are. This shift is both convenient and inclusive, enabling people in areas without a developed physical banking presence to become customers.
Mobile apps also offer a wide range of ancillary services that enhance user experience. For example, they may provide budgeting and savings tools, credit score monitoring, and notifications that alert customers to financial transactions, including fraudulent ones.
Automation & Processing Acceleration
Artificial intelligence is transforming traditional banking in several crucial ways, with automation at the forefront.
By collecting and analyzing data on core banking processes, AI and machine learning can automate repetitive tasks like account creation, changes and additions to customer data, loan processing, or the creation of various reports required to ensure regulatory compliance.
AI chatbots can assist customers with account operations and provide low-level troubleshooting, freeing up human agents for more complex interactions.
This accelerates processes like customer onboarding and troubleshooting, payment processing, and fraud detection, allowing for safer and less error-prone operations.
Data-driven Analytics
Banks can benefit even more from the business intelligence made possible by leveraging AI to analyze the vast amounts of data they create and store. Doing so has the potential to shape practically every aspect of banking operations.
For example, customer insights let banks segment their customer base and devise different products or advertisement strategies to target each segment more successfully. Performance data and customer feedback can also be used to tweak existing financial instruments and develop new instruments that better serve customers’ needs. Pertinent data may even help banks predict market trends and pivot early to capitalize on them. Furthermore, as cybersecurity becomes increasingly crucial, integrating the best password managers into banking systems can significantly enhance the security of customer accounts and sensitive data.
Cybersecurity Concerns
The push for digitization in the banking industry goes hand in hand with new cybersecurity challenges. Banks are a primary target for data breaches and ransomware. High-ranking banking officials need to be wary of increasingly sophisticated spear phishing attacks. Customers are also at greater risk, especially if they don’t take securing their banking credentials seriously.
Consequently, banks and customers alike need advanced safeguards. Team password managers especially work well in a business capacity. These tools allow both individual customers and entire institutions to protect all their credentials with unique, complex passwords and multi-factor authentication. As emerging regulations increasingly govern data privacy and security, banks need to further enforce their cybersecurity posture with network monitoring, advanced access control, and data encryption.
Potential Blockchain Applications
Blockchain and the associated rise of digital currencies have proven to be one of the most disruptive financial technologies traditional banks didn’t have an answer to. Now, they’re starting to leverage the persistent ledger and immutable tracking aspects to develop new services.
These will eventually lead to simpler cross-border payments, which digital currency has already made possible. Other benefits may include greater transparency and fewer opportunities for fraud, along with reduced costs and streamlined process verification.
Conclusion
Traditional banking institutions are slow to adapt to change. Still, the FinTech explosion we’ve witnessed in the last decade has forced even them to get with the times for the benefit of everyone involved. Continue to keep up with the latest banking advancements to reap their benefits early.