With tech firms and banks playing to their respective strengths, it is inevitable to imagine a future where customer management will be controlled and perfected by fintech while banks provide the middle and back-end operations. The extremely rapid digital transformation of financial services will help achieve invisible banking within the next two decades. Invisible banking is the in-depth integration of financial services into the daily lives of customers using existing resources by leveraging technology and making banking services discreet.
The road to keeping up with the latest retail banking trends completely relies on the digital banking maturity of financial organizations with the changing technological innovations. Hence, banks can quickly refine their core competencies like risk analysis and regulatory compliance by partnering with fintech and adopting their expertise.
Block Chain and Distributed Ledger Technology (DLT) in Banking
Blockchain technology is a database mechanism that provides a secure and transparent way of real-time recording of transactions across networks. Similarly, DLT or Distributed Ledger Technology refers to a collection of synchronized data that are spread across multiple sites and organizations.
By 2025, blockchain and DLT are predicted to bring fundamental changes to the financial industry due to their countless benefits. By abandoning third parties and SWIFT protocol or society for worldwide interbank financial telecommunication that requires days to complete cross-border transfers, banks can now securely transmit instructions and messages on transactions within hours. These technologies ensure fast, transparent, and secure cross-border payments and remittances for retail customers.
Blockchain technology also supports retail customers during their onboarding process by guaranteeing a decentralized and secure path for identity verification and streamlining their know your customer process. Along with these, DLT technology supports banks by creating secure and streamlined documentation for capital funding of supply chains where all the transactions are transparent for every party involved. With smart contracts, or self-executing agreements, with predefined rules, digital asset management, where assets are converted to digital representations or tokens that permit fractional ownership and improved transparency, and countless other benefits, Blockchain and DLT technologies will remain the trend for secure and transparent retail banking.
AI and ML Technologies
The world is all set to be run by Artificial Intelligence and it comes as no surprise that not only Chatbots but major decisions in the back-end management are also taken by AI and Machine Language (ML) technologies.
With the support of natural language processing (NLP), AI and ML algorithms collect and analyze vast amounts of customer data spread across organizations to understand customer behavior and create behavioral patterns. Based on this analysis, AI and ML tools provide insights into credit scoring, risk analysis, detect anomalies, and prevent fraudulent activities based on pre-defined rules set to prevent fraud. Following the same pattern, these tools also perform risk analysis on the financial history of a potential borrower during loan origination to calculate the probability of return. AI and ML algorithms allow banks to stay up to date with the ever-evolving regulations and maintain strong supervision of all activities to ensure compliance and report any discrepancies to authorities.
Also, by collaborating with Robotic Process Automation and NLP, AI, and ML achieve intelligent process automation to automate repetitive and complex data processing tasks in the back-end operations of banking. By incorporating AI, ML, and NLP capabilities, automation goes beyond performing rule-based tasks to recognize patterns and make decisions with minimal human intervention.
These innovative technologies support financial organizations in making quick and error-free decisions with reduced operational costs. With the cloud-based mobile availability offered by fintech, banks can easily integrate these technologies with the bank’s system.
Banking in Metaverse
Although the decades-long digital transformation of the financial sector made banking easy, the relationship between the customers and banks is almost minimal. By winning the attention of Gen Z, banks are bringing back traditional personal relationships with customers through banking in the metaverse. Banks in the metaverse are the next level to digital interaction where people can meet and conduct transactions of digital assets. Fully leveraged by augmented and virtual realities, banking in the metaverse creates communities and a shared experience for customers by giving a third-dimensional twist to digital services.. Now personalized customer experience can be enjoyed in a more comfortable environment like creating an investment portfolio, getting financial advice, and even performing regular activities like withdrawing cash and branch marketing.
Core modernization through technologies is a never-ending process for the financial sector. To meet the expectations of the upcoming digital-native customers, banks must upgrade themselves in technological aspects along with keeping up with industry changes like open banking and evolving ESG (environmental, social, and governance) strategies. Widespread adoption of these upcoming retail banking trends is already underway with banks like Kookmin and DBS already having a metaverse experience laid out for their customers.
Overcoming technological uncertainty and lack of time and infrastructure to change the fundamentals of banking and competing with global banks is possible only through healthy partnerships with fintech. Creating user-friendly platforms and launching scalable technologies and customized experiences specific to the target audience is made possible only by constant upgrades of the bank’s system.
Find out how to transform your bank’s core systems to be future-ready by scheduling a demo with us.
Uncover the latest focal points in retail banking strategy and complete the digitization of partially digitized banking domains with our conclusive article in the Retail Banking series here.
