We live in the most dynamic times where nothing we witness or hear about remains the same days or weeks. Artificial intelligence and machine learning are disrupting every industry, making processes a lot more advanced and lives more convenient.
We have earlier discussed how A.I. and M.L. are shattering the conventional ceilings of the automobile, telecom, and stock markets. The fourth industrial revolution has even begun to impact the social constructs and sex life of individuals.
Another industry that is all set to be completely overhauled in the coming decades is banking. The revolution has already begun, and the institutions regulating your finances are adapting to the new innovations that pave the way for a series of disruptions.
Why are new innovations required to change the age old ways of banking?
The need for new innovations in banking is the two buzz words of the 21st century- consumer satisfaction and dynamism to meet the new problems of the new world. There is a heavy influx of Fin-techs worldwide, rushing to grab the market share with innovative services and technologies. Gone are the days when the only partakers in the financial sector were banks. The spur of endless digital wallets and payment getaways have not just spoiled the consumers with choices. They have also erected new challenges for the world.
Cybersecurity is one of the biggest issues that, despite immense development, still prevails in the monetary sector. Aggressive digitization has added to the problem in equal measure as it has brought convenience to individual’s
Therefore, innovations are essential to meet the advanced demands and challenges of the modern world.
Having said that, here are the top 10 innovations that are all set to change the face of the banking industry irrevocably.
The first on our list is blockchain, a technology that has become a buzzword lately. However, very few understand it. It is ironic how the emerging obsession that financial institutions are vehemently opposing, cryptocurrency, uses the same technology that banks are eagerly looking forward to adopting. The idea here is to leverage blockchain innovation in making banking more secure, cheaper, and transparent.
In the simplest terms, blockchain is the system of a decentralized digital ledger of transactions distributed and replicated across all the computer networks on the system.
The major reason for the popularity of blockchain in the banking sector is that it eliminates the middleman and encourages peer-to-peer transactions. The transaction details recorded on blockchain are permanent and secure as data storage in a decentralized ledger reduces the risk of manipulating data.
2. Robotic Process Automation
This is a familiar term that will help the banking sector to reduce labor, operational cost and avoid errors as much as possible. A lot of banks around the globe are already embracing RPA to provide a better customer experience.
One of the best examples of RPA is the chatbots that allow bots to solve the low-priority queries of the customers while keeping the high priority queries for the human agents. This innovation is also helping the industry adhere to better compliances within an extremely lesser time than before
In insurance companies, Robotic Process Automation is enabling more efficient handling of claims.
3. Artificial Intelligence
The biggest example of how the banking sector is leveraging Artificial Intelligence for smooth operations is chatbots. A.I. is also facilitating the efficient execution of mobile banking while strengthening the security and safety of fraud prevention.
The significance of A.I. comes from the fact that it is fundamental to the functioning of almost all the technologies on this list. Robotic process automation, vast data analytics, voice interface, everything is enabled with the help of A.I.
A.I. enables a bank or financial institution to gather a huge amount of data from the current and historical records, implement decisions, and function on a wide range of processes- customer service, back-office operations, marketing, risk management, compliance, etc.
This innovation, in simpler terms, will shift the banking organizations from the scale of an asset to the scale of data.
4. Quantum computing
This is the technology that would still take decades to be a success. However, financial organizations like Barclays and JPMorgan are already partnered with IBM to develop quantum computing.
So what exactly is Quantum computing? It is a technology that enables complex calculations and data operations through quantum mechanics. The functioning of this innovation is a leap ahead of conventional computing that uses bits in the form of 1 or 0. Under quantum computing, computers will use quantum bits, which can range to as many as three bits, 1 or 0 or both.
5. Hybrid Cloud
To begin with, what exactly is a hybrid cloud? It is a solution that allows the combination of private cloud with multiple public cloud services through the proprietary software that enabled communication between two distinct services.
In simpler terms, it is an artificial cloud that enables storage, computing, and services throughout public cloud hosting from an IaaS (Infrastructure-as-a-service) to an internal private cloud.
The best example of hybrid clouds in the banking sector is the partnership between ICICI Bank with Zoho. The partnership eliminates the need for data entry, allowing multiple streams of payment to customers.
Banks are turning towards a hybrid cloud to eliminate the expensive proposition for real-time data needs. It also allows financial institutions to relocate the digital resources where they are required quickly, making the process more efficient.
It is not specific to a geographic location and therefore sparks innovation.