Big Technology in Banking

Banking has already entered a critical phase of technology. Even though banking has been slower than other industries in adopting the latest technologies in their operations, banks and financial firms are trying to catch AI, blockchain, and other innovative technologies to create improved products and services. 

Technologies like AI and cloud computing can put the banks and credit unions close to par with fintech companies. The rapid movement of technology into the hands of users has profound effects. Application programming interfaces, cloud computing, video collaboration, P2P payments, and digital account openings are some technologies that are making banking easy and convenient. Let us explore in this article the big technologies that are transforming the banking industry. 

Artificial Intelligence

Although banking and financial service tend to adopt the new technologies slower than other industries, many decision-makers prefer investing in artificial intelligence. Banks use AI tools like chatbots and robots to enhance their customer service. AI also helps banks to facilitate mobile banking for their customers. 

Payment service providers like PayPound also makes use of AI to offer reliable and hassle free payment services to clients. The AI also prevents fraudulent activities and detects them at an early stage for the security of user data and information. Banks and financial institutions are also using artificial intelligence in the areas of risk management and act as a foundation for other technologies like big data analytics, voice interfaces work, and robotic process automation. 

Blockchain

Blockchain technology was first used for Bitcoin. Blockchain is a distributed database used to keep track of transactions. Harvard Business Review predicts that the blockchain will harm banks in the same way as the internet disrupted the media. 

Blockchains are transparent, very secure, and relatively inexpensive to operate. As banks and financial companies know well how blockchain can help them reduce costs, improve security, and customer satisfaction, more and more institutions will adopt the technology. 

Blockchains would eliminate gatekeepers and third parties in the credit and credit system while making loans more secure and lowering interest rates. The way information and money are exchanged today is changing through smart contracts based on blockchain technology.

Banking as a Service

The pressure on traditional banks comes from Big Tech companies who have created a seamless and easy-to-use digital customer experience. A trend in retail banking stems from this challenge, especially from the shift in consumer expectations. 

The continuously growing demand for online banking is changing the way the entire banking industry works. The sector is facing an increase in new banking technologies, such as banking as a service (BaaS), which are reshaping the entire retail banking sector. 

BaaS has often been seen as an application programming interface (API) strategy that is part of a broader concept: Open Banking, a collaborative model in which banking information is shared with third parties to provide enhanced functions and services in the market.

Video collaboration

The pandemic has made face-to-face interactions difficult (if not impossible), and this has accelerated plans by banks and credit unions to use video collaboration tools. This is a sign of a major psychological shift for many leaders in the financial services industry – it’s an admission that branches may not be as important a channel as many have long believed.

It’s also an acknowledgment of something that continued use of branches has little to do with your desire to go to a physical location but a lot to do with your desire to interact with a person.

Cloud Computing

While there are still reservations about cloud computing, the general sentiment in the industry has changed so much in recent years that many (if not most) banks and credit unions believe they are on the inevitable path to the cloud.

However, the challenge for technology providers has shifted from evangelizing the cloud (with claims for faster time to market and lower total cost of ownership) to presenting concrete migration strategies and realistic projections of the impacts of processes and costs.

Quantum computing

Several banks are already using a new generation of processors that use the principles of quantum physics to process large amounts of data at superfast speeds. In 2020, CaixaBank, one of the top-rated banks in the world, announced that it used a quantum computing strategy to develop a machine-learning algorithm to rank customers based on their credit risk. With this project, CaixaBank claims to be “one of the first banks in the world to integrate quantum computers into its services.” 

Big Data

Financial institutions can use big data to learn more about customers and make real-time business decisions, including learning a customer’s buying habits, sales management, segmenting customers to optimize marketing, as well as cross-selling product management, fraud management, risk assessment, and customer feedback analysis and reporting. Big data analyzes not only help to identify market trends but also help financial institutions to streamline internal processes and reduce risks.

RPA 

As robotic process automation can save labour and operational costs and minimize errors, many financial institutions are beginning to use this technology to create the best possible user experience for their customers and remain competitive. In robotic process automation, the software is programmed so that robots and virtual assistants can perform repetitive and time-consuming tasks correctly and quickly without human intervention.

RPA helps banks process low-priority customer inquiries such as customer service chatbots. In insurance companies, RPA is used to automate parts of the claims management process. Another way RPA affects financial institutions is to ensure compliance in a highly regulated industry. Today, thanks to RPA, customers can decide on their credit card orders within hours, but sometimes almost immediately after submitting the information.

Summing Up

Although banks and financial services are experiencing a major shift by making use of these big technologies, there is always room for improvement on the user end. Customers of banks and financial service providers need to have devices compatible to use their technologies. A big change is possible only when it happens simultaneously on the user end. However, the big tech companies are creating a future that will be highly dependent on technology and make banking super easy and highly secure for users.

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