Technology will continue to disrupt industries in 2019; the banking sector being one of them. Once the domain of financial technology (fintech) startups, innovative traits and practices disrupting the financial sector are now being widely adopted in the banking sector. Here are the 5 ways in which technology will change banking in 2019.
Competition in the financial sector is fierce currently. To keep pace with their competitors, more and more banks are now investing handsome amounts into technology that will digitize every aspect of their business. The traditional banking landscape is changing rapidly and is expected to transform completely in the next five years.
An increasing number of remote applications that make branchless banking a reality, and advanced biometrics and cryptography that increase protection against bank scams are some of the many technological developments that we can expect to see in the banking sector in 2019 and beyond. However, the impact of technology in banking is not limited to these. There are many more ways technology will take banking into the future. Following are some of them:
1. Online Banking with Continue to Replace Branch Banking
Thousands of brick-and-mortar bank branches closed during the current decade as more and more banks looked to shift their customer operations online. This clearly indicates that customers are no longer interested in bank branching like they did in the past. This trend will only grow in 2019 and beyond.
There are several reasons people are opting for online banking over traditional branch banking. These include, but are not limited to, a better customer experience, a faster banking experience, and lower costs. While bank branches won’t go away completely—at least not anytime soon—they will start to lose their appeal. More and more banks will start offering their services online. Ultimately, branch banking may become something to be found only in history books.
2. Banking Customers Will Have Greater Control Over Their Data
Today, a lot of data gets shared without consumers’ knowledge — the Facebook-Cambridge Analytica fiasco being a perfect example of this. The good news is that this practice will be curbed from this year onwards.
According to one estimate, majority of consumer banking accounts will have controls in 2019 that allow consumers to hand-pick who can access their data and how. This is expected to happen by fall this year as application programming interfaces with the above controls are implemented by the large banks. However, this capability will not be limited to just the large banks. Smaller banks are also expected to find a way to give their consumers control over who can access their data and how.
3. Mobile Payments Will Continue to Grow Globally
Processing more than a billion dollars per day, the global mobile banking and payments industry is enormous. Regions that have witnessed widespread adoption of mobile payments are sub-Saharan Africa and Latin America. This increased adoption is a response to financial exclusion caused by lack of financial services such as banks in these regions.
Financial exclusion is mostly prevalent in poor or economically unstable regions or regions where traditional financial services do not see any value in setting up their businesses. Barriers to entry for brick-and-mortar financial institutions do not help either. However, on the other side on the coin, this is resulting in increased development and widespread use of mobile banking services as primary financial management resource.
Many people in economically disadvantaged regions fail to qualify for a bank account as they are unable to provide the funds and proof of identification required by traditional/brick-and-mortar banks. Another barrier is the distance that needs to travelled in order to access these banks; a challenge for people in remote locations such as rural areas. With mobile banking services, these people have a convenient way of meeting their financial needs and obligations.
Compared to traditional banks, mobile banking services are far more accessible. This accessibility is increasing with the adoption of smartphones. Without having to open a traditional bank account, anyone with a smartphone and internet access can become a part of the mobile banking system. In 2019, mobile banking is expected to grow at a rapid pace, especially in areas that are currently dependent on technology. Additionally, we are likely to see blockchain become an integral part of the financial technology within the mobile banking sector.
Those looking to utilize mobile payment solutions will be provided with an unshakable record of personal data, which will provide the mobile banking industry with another layer of security. These blockchain solutions will come with in-built security that not only prevents fraud, but also make it easier for people to join the formal financial system. The development and deployment of 5G technology is another development that will increase the adoption of mobile banking and payment solutions in 2019 and beyond since it’s paramount for mobile banking’s increasing ubiquity.
4. Upgraded Automated Teller Machines (ATMs)
When they were first introduced in the 1960s, automated teller machines (ATMs) completely transformed the banking system. 2019 will see the next revolution in ATMs take place and this will involve contactless payments. Just like contactless payments are possible with Google Wallet or Apple Pay today, contactless ATM transactions using a smartphone will be possible from 2019 onwards.
5. AI-Driven Predictive Banking
Our fifth and final prediction for the ways technology will change banking in 2019 is AI-driven predictive banking. A trend continuing from 2018, the real-time development of predictive profiles of banking customers is made possible by consolidating all internal and external data. Regardless of their size, all banks today can not only know their customers better but they can also provide them with advice for the future. This is all made possible due to the rich, accessible and financially viable data generated from AI-driven predictive banking.
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