Some of the most important emerging trends in retail banking include customer-centric offerings, digitization, and innovative technologies. In 2019, we can expect to see an increased focus on these areas, especially as retail banking technologies improve and get more sophisticated.
What does this mean for customers? It means that they can look forward to more personalized services that are provided to them at a preferred time and place. Put simply, technological innovations in retail banking and emerging trends aimed at improving the customer experience promise to help banks realize greater efficiencies in their operations while changing the banking landscape significantly to suit the 21st-century customer.
By emphasizing transparency, openness, and sharing, financial technology is completely shaking up the retail banking sector. If you’re part of the retail banking sector or a key stakeholder, then following are 4 retail banking technology trends you need to watch out for in 2019.
1. Increased Sharing of APIs Via Open Banking
Also known as connected banking, open banking has already found its feet in Europe and parts of the Asia/Pacific region and now it is looking to establish itself in the U.S. What is open banking? It is a form of banking in which APIs are shared by financial institutions with their partners or other organizations that may be interested in them.
According to research, there has been tremendous growth in banking API development recently. Non-banking companies find it easier to develop apps when APIs are shared with them by financial institutions. This, in turn, makes it easier for retailers, end-users, and some entities to connect with banking information. An example of this is Apple’s use of open APIs which had made it easier for the company to get into the credit card business.
Additionally, the need for relying on credit card companies or 3rd party intermediaries to make transactions will be eliminated for companies such as Amazon, Google, and Facebook. So, we know how open banking can benefit organizations but what about customers? How does open banking benefit them? It benefits them by giving them a choice.
Customers, both individual and corporate, can make and receive payments and access their data through a variety of options. Additionally, open banking makes transaction costs and other fees transparent. However, it is important that open banking, wherever it happens, is regulated.
A step in this direction has been taken by the European Union by designing PSD2 or the Payment Services Directive. The purpose of this is to make the open banking system a level playing field and protect both payers and payees.
2. Increased Digitization Across Businesses
Digital and cloud-first models have already established themselves in the retail banking sector. Now, innovative technology is being used to tinker with the front-end and meet the digitization demands of new-age customers.
Therefore, you can look forward to increased digitization within business lines such as commercial lending and payments, small and medium-sized enterprise (SMEs), and retail in 2019 and the years that follow. You can also expect further digitization of the entire customer lifecycle. This will be achieved by re-engineering the current largely analog processes and enabling increased access through digital apps. Expect servicing, acquisition, collections, and onboarding to have completely digital foundations in the future.
3. Voice Banking and Intelligent Assistants
An increasing number of banks and credit unions have either already implemented or are seriously considering implementing intelligent assistants and voice banking as part of their service. Following are some statistics related to this:
- According to NPR and Edison Research, the number of smart speakers owned by adults in the U.S increased by 78% in 2018 to reach 118 million
- By 2020, there will be 8 billion people worldwide using digital voice assistants such as Alexa, Cortana, Siri, etc.
- In its first year, the digital assistant of Bank of America Erica was used by over seven million people and it handled interactions exceeding fifty million
- According to Capgemini, a good percentage of retail banking customers today prefer to use a voice assistant instead of visiting the physical location of their bank
While the popularity of digital assistants amongst banks and other financial institutions is increasing each day, only a few organizations in the retail banking sector have adopted and implemented intelligent assistants and voice banking. These include the likes of the U.S Bank, Bank of America, Barclays, and USAA.
According to a Cornerstone Advisors research, only 2% of credit unions and mid-size banks have implemented chatbots or digital assistants so far. However, 13% have planned to implement them this year, 45% are thinking about it while 41% have no plans to implement chatbots.
From the above, it is clear that AI-powered digital assistants remain largely untapped in the banking industry, which includes the retail banking sector. However, many industry experts predict that more than half of all interactions in banking will occur via voice-first devices in five years.
4. Data-Driven AI and ML-Based Decision Making
Massive amounts of secure financial customer data are held by banks and other financial institutions today. This presents banks and financial institutions holding the customer data with an opportunity to utilize data safely and securely to improve customer experience.
In today’s age of open banking, this has become almost a necessity. This is the reason so many banks today are looking to use data in a way which gives them a ‘720-degree view’ of the customer. Essentially, this is a way to understand the needs of customers and provide them with a financial solution even before they ask or apply for it.
This data flow will be aided in real-time, from insight to action, by the recent emergence of AI capabilities and machine learning tools. Although we can see this triggering multiple applications, the most critical impact will be on credit decision making. Previously, decisions about loans were made in days. Now, they are made in hours thanks to data-driven decision making. If AI capabilities and ML tools are added into the mix, then decision making about credit might take no longer than a few minutes in the future.
These are the 4 retail banking technology trends to watch out for in 2019. For more emerging tech trends in the retail banking sector, keep following our page.
by Bobby J Davidson
We love our company and we love what we do. Check out the ‘Why Percento‘ page to learn more: Love of Technology and Business! As the President of Percento Technologies International, I provide day-to-day leadership to the company’s senior management and I am personally involved in the strategy, business development and sales activities of the firm.
The company was founded in 1999 with the purpose of providing a one call source for organizations in need of Enterprise IT Consulting and Management. We also provide a line of products in the boutique Cloud Server space with a touch of high-end website strategy consulting and design services. We personalizes the IT Service experience with a team approach, working with clients from diverse sectors of industry, including energy services, financial, legal, entertainment, healthcare, hospitality, retail and general and/or corporate business. percentotech.com/
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