The subject of uplifting routine technology has become one of the major ranking issues impacting the retail sector. The worldwide trends in financial technology are shaking up the retail banking sector from the inside out; that’s why it has become the major concern of retail bankers to cope up with the new technology and trends.
The digitization, customer-centric services, etc., represent important priorities for retail banks. All these new technologies and trends throw light on sharing, openness, transparency, as well as the challenges the banking sectors must embrace to keep up with the increasing competition, tackle with the care for security and privacy, and keep up with the soaring consumer expectations. MarcDeCastro, research director for consumer banking engagement strategies IDC, states that open banking is the most significant banking trend in the industry.
Now that’s great news for the customers who are going to leverage new and personalized offerings and the banks who would realize their greater operational efficiencies. The banking landscape would be completely changed in response to regulatory requirements and industry standards.
Open Banking or BaaS (Baking-as-a-service)
The consumer lives in the digital world, and hence they would also want their banking experience to be digitals as well. Let’s take an example of Uber, Airbnb, or Netflix that testifies this fact. In the retail banking business, we are going to witness a big trend that will accelerate in the year 2022. A move towards open banking, which in its broadest sense encompasses the need for banks and credit departments to respond to the soaring expectations and needs of the consumer and provide them compelling end-user experience.
Basically, the open banking system would enable the banks to deliver the services in broad value chains by leveraging fintech, start-ups, service providers, and solution software suppliers in concert. Many factors would enable this change, like rapid acceptance of open APIs by banks and fintech to collaborate at scale and the progressive regulation of this open approach in Europe, the U.K., and wide acceptance in North America. The banks would shift their approach from just by being the builders of financial institutions to the curators of Consumer-driven financial management services. Baas, i.e., banking-as-a-service, would transform the competitive landscape and economic activities and operations of doing businesses.
Hence, the retail banks would move towards the entirely new era of digitization containing Robo investing, customer lending automation, clearing, and settlement of cash and security transactions.
Always-On, ‘Invisible’ Banking
As we are witnessing, the entire business world is moving towards the post-digital age. But the question is, are banks ready to embrace invisible banking? The traditional brick-and-mortar banks have made their way for the fintech invisible banking. The customers no longer want to revolve around the banking services and waste their time. All they want are the services that they can integrate into their lives and provide them seamless banking experience, convenience, quick and more fun – “invisible,” but what is it actually?
In retail banking- we will soon witness the big trends and complete digitization that will accelerate in the near future- the move towards invisible banking, where the banks belong to an ecosystem nearly invisible to the consumer’s expectations. Invisible banking is enabled by A.I. development, allowing the interaction to be bespoke, meaningful, and hands-free. The invisible banking is transparent with simple terms and conditions. It engenders support trust and enhances customers’ lifestyles by providing insights into their finances whilst giving them value-added services.
The emergence of the fintech challengers has disrupted the traditional banking systems, pressuring them and many financial institutions to transform themselves and shifting consumer expectations digitally. The traditional banks combined with invisible banking have provided many benefits to the consumers in the areas like:
- Onboarding has made the process of banks to board a customer easy. Which earlier used to take days can be done on the same day. This is also because of the next-gen KYS processes and the immediate issue of virtual cards.
- Interactions, many fintech banks, such as Monzo, have realized the importance of customer interactions lately to build long-term relationships and proactively create online communities around their services and interact with their customers more than five times per day on average.
- Notifications, by leveraging social media and in-app communication features, the fintech banks can now react to their consumer’s activity in real-time. Through this, they can not only advise them, but they can also enhance their financial well-being, acting as an invisible financial advisor.
However, in a way, the invisible banking concept is not new for some businesses like direct deposits in an example of invisible transactions. But now, the scope is greater, and speed has become much closer to immediate.
Intelligent Assistants and Voice Banking
After witnessing the rapid adoption of voice assistants among consumers, it has proven to be imperative for all banks and financial institutions to seriously integrate the technology into their services to provide a top-notch consumer experience.
| Some statistics helped build the case like: |
| The number of voice recognition devices like Amazon Echo or Echo dot has increased by more than 70% in the U.S., as stated by the research conducted by Smart Audio Report from NPR and Edison Research. |
| BOA has its personal smart voice assistant named Erica been used by millions of users since it made its first debut. |
| According to Capgemini’s research, more than 1/3rd of retail banking customers prefer voice recognition assistance over in-person visits. |
These are examples of how virtual assistance has shown a willingness to incorporate. These statistics show the real picture of how the voice assistant has offered new ways to simplify complex issues for customers. Additionally, it has reduced the need to use the mobile version of the application, thanks to the ability to ask questions in a more conversational manner.
The implementation of voice assistants in the banks has also increased the technological availability for older people or people with disabilities. It has been proven to be secure and supportive when it comes to customers’ banking transactions. They can now check on their bank balance or transaction history and other bank-related activities just by giving a command.
The voice verification technique has helped the bank customers simply ask for the services; for instance, they can now complain about their lost ATM cards, make a payment, etc.
The banks are regularly examining the voice identification technique varying from consumer to consumer. If a customer calls on customer service, that customer’s identity will be automatically displayed.
All this clearly states the potential of AI-enabled voice assistants or digital assistants remains untapped in the banking space to a great extent.
AI-Driven Personalization Still on the Do List
Empathizing customers and understanding their needs has become crucial in the faster-growing world. The personalization approach can be very beneficial not only to the customers but also to the providers. The recent emergence of Artificial Intelligence capabilities will help retail banks to take action in real-time. Put it simply, the A.I. has reduced bankers’ exertion, ensuring the stability and growth of banks in the 21st century. Now they have put their digital workforce to deal with the customer’s needs.
A.I. has the potential to scale customers’ data, revolutionizing banking transactions. A.I. can easily observe, analyze and interpret the actions of the bank customers (with all due respect to their privacy) deliver rich experiences that will automatically provide end-user experience and would generate customer loyalty in the post-digital era. A.I. has increased customer satisfaction and trust by reducing fraud.
The A.I. is comprised of intellectual sensors that detect anti-money laundering, detection of fraud, the risk involved in credit, etc. All these massive A.I. capabilities have forced retail bankers to apply it directly to the services. That’s why it has become crucial for banks and credit unions to take the steps to delight customers. However, one of the main challenges for A.I. is to find the balance between proactive insight and security and privacy. Some studies state that consumers are more likely to share their personal details and information with the banks on the condition when they are being offered highly personalized services. A global survey conducted by Capgemini stated around 44% of banking consumers feel that way about sharing their personal information with their banks.
For some, it could be early to implement A.I. in the banking systems in terms of personalization, but there are many who feel it’s the right time to leverage the potential of necessary technology and build expertise.
Enhanced Employee Skills for Digital-First Banking
The new and emerging technologies have influenced the banks or customers they serve and the workforces of these banks. To put it simply, after witnessing the up-gradation in technologies, the banks will have to work on enhancing the technological knowledge of their existing employees or replacing the workforce with those who are acquainted with the latest technological trends.
According to research conducted by Accenture, the retail banking workforce is more technologically upgraded than their institution, compelling the workforce to wait unless their organization gets acquainted with 21st-century technological trends. Putting the banking institutions at the risk of closure or decreasing their market value.
This is why all these latest needs have compelled the Banks and financial institutions to invest in the enhancement of the knowledge of the existing workforce. Hence, the combination of the employee’s skill set and the latest technological trends will support the AI ML emergence and accelerate the growth of banks and credit unions.
Also Read- How Can IoT Improve the Retail Industry?
Conclusion
The emergence of all the new technologies and trends would bound to have a significant effect on the retail banking sector. A.I. is going to transform how customers interact with the banks and how the retail banks would conduct the business. An investment in A.I. would be essential as it truncates the relapsing of the retail banking industry and helps set up the banking enterprise ahead of the competitors. It’s also important for retail banks to prepare their existing staff for these changes by presenting them with career and training opportunities; this will help them develop the skills and knowledge needed to transition to roles that leverage A.I.
Hence, the Banks should be prior to keeping pace with the latest upgradation and technology. If you are into banking and financial services and want to develop a fintech solution for your business, Matellio has the perfect solution for you. We have been developing robust finance digital solutions for more than a decade. Our team of expert developers possesses wide expertise in the next-gen technologies and are ready to develop a flawlessly engineered solution for you. Discuss your unique idea with our experts over a free consultation call and let’s get started!
