bank innovation, fintech future of banking

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Banking and financial services industry are changing and growing rapidly. Technology is allowing both larger banks and fintech companies to move into more specialized areas, such as small business lending, that heretofore had been the domain of local banks. There has been a strong demand of adapting and implementing AI solutions, Big Data and Cloud Computing along other technologies to keep up with the tech revolution.

Nowadays, visiting a bank branch turns into a faint echo of the past, and mobile apps can be easily called the future of fintech and banking. In the world of personal finance, consumers have increasingly demanded easy digital access to their bank accounts, especially on a mobile device. To achieve a consistent growth with banking relationships, the financial industries will have to provide and get access to the emerging markets as well. Most major banks now offer some kind of mobile banking feature, especially with the rise of neobanks.

Neobanks are essentially banks without any physical branch locations, serving customers with checking, savings, payment services and loans on a completely mobile and digital infrastructure. These banks need to develop and implement technologies that allow them to offer their products while making an intelligent use of their data, which need to be on the cloud and in physical premises and deploy the solutions accordingly. Moreover, neobanks can decide the storage of data in public, private cloud or hybrid cloud as per the business decision.

Neobanks have benefited enormously by adopting newer technologies like AI resulting in lower costs and more revenue through multiple channels. A report from Business Insider Intelligence says the average estimated cost savings for banks using AI will be $447 billion by 2023.

AI also helps financial institutions to make more effective lending decisions and better risk management. This technology work along with other trends like big data analytics, voice interfaces, RPA, etc. Furthermore, AI is also instrumental in the way financial institutions enhance security and prevent and detect fraud. The technology helps financial institutions with risk management and lending decisions and is foundational in making other technology such as big data analytics, robotic process automation, and voice interfaces work.

AI collect critical data, but that data needs to be understood to take the best out of it. The amount of data generated by the financial industry—credit card transactions, ATM withdrawals, credit scores—is mind-boggling. And being able to put that data to use to make business decisions and process it effectively to glean actionable insights will be critical to staying competitive in the future. With the increasing amount of data generated every day by the banking sector, it is becoming difficult to extract actionable insights that can help in growing more opportunities. Enters Big Data. This technology has undoubtedly put all the banking data i.e. debit/credit card transactions, ATM withdrawals, money transfer, etc. to make informed decisions and process it effectively to gain valuable information that is needed to stay competitive in the future.

Big Data helps in making banks learn about their customers in a better way enabling them to make real-time business decisions through analysis of customer’s purchase habits, sales management, etc. Other added benefits of big data are better marketing, product cross-selling, fraud detection, customer feedback analysis and many more. Additionally, it aids in identifying the latest market trends and streamlining internal processes to reduce risks.

Cloud banking is the future technology that banks & Finance Institution would like to adopt. This is mainly because of the fact that banks want to reduce costs and offer better product & service offerings across the retail & corporate banking segments.

Faster-to-market with new product launches will be key differentiating factor in the cloud banking space, with the help of API’s integration, which can be easily integrated with another ecosystem or fintech company in quick time. Enterprise level support will be the key differentiating factor in cloud banking, as data across the group level can be integrated and offered as services to its customer.

According to the IT road map, banks can decide the products and data, which need to be on cloud and premise and deploy the solution accordingly. Moreover, banks can decide the storage of data in public, private cloud or hybrid cloud as per the business decision.

Further development and introduction of technology can further help banks meet the regulatory and compliance framework levied by the central bank / regulatory authorities. Like GDPR in European countries or CCPA regulation in California State, US, banks need to adhere to specific regulations and store data accordingly in the respective geo-locations.