Digital Transformation is changing they way customers interact with banks. New digital technologies are fundamentally changing banks from being a branch-centric human interface driven to a digital centric, technology interface driven operations.
In next 10 years, I predict more than 90% of existing branches will close and people will migrate to digital banks. In this article, I have listed out 6 main technologies needed for next gen banking - aka the Digital Bank.
1. MobileMobile Apps is changing how customers are interacting with bank. What started as digital payment wallets, mobile banking has grown to offer most of the banking services: Investments, Account management, Lines of credit, International remittances etc., providing banking services anywhere, anytime!
2.Cloud & API
Mobile banking is built on cloud services such as Open API & Microservices. Open API allows banks to interact with customers and other banks faster. For example, Open API allows business ERP systems to directly access bank accounts and transfer funds as needed. Open API allows banks to interact faster, transfer funds from one back to another etc. In short Cloud technologies such as Open API and microservices are accelerating interactions between banks, and banks & customers, thus increasing the velocity of business.
3. Big Data & Analytics
Big data and analytics are changing the way banks reach out to customers, offer new services and create new opportunities. Today banks have tremendous access to data: Streaming data from websites, cloud services, mobile data and real time transaction data. All this data can be analyzed to identify new business opportunities - micro credit, Algorithmic trading etc.
Advanced analytical technologies such as AI & ML is increasingly being used to detect fraud, identify hidden customer needs and create new business opportunities for banks. Though these technologies are still in their early stages, it will get a faster adaption and become main stream in next 4-5 years.
Already, several banks are using AI tools for customer support activities such as chat, phone banking etc.
5. Biometrics & security.
As velocity of transactions increases, Security is becoming vital for financial services. Biometric based authentication, Stronger encryption, continuous real time security monitoring enhances security in a big way.
6. Block chain & IoT
IoT has become mainstream. Banks were early adapters of IoT technologies: POS devices, CCTV, ATM machines, etc. Block chain technology is used to validate IoT data from retail banking customers. This is helping banks better understand customers and tailor new offerings to create new business opportunities.
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