International banking has seen a significant transformation over the years, and the evolution is expected to continue well into the future. Today’s financial institutions are more focused on the customer because they are responsible for success in the financial sector. The game’s name is a customer experience that moves smoothly.
Giving customers more produces a whole new set of challenges for banks worldwide regarding creating long-term growth. This growth will allow the financial sector to continue to offer products and services that meet the needs of an always-evolving customer base. Banks must manage their talent in new ways, embrace innovation, and be willing to establish partnerships in the tech sector to receive the financial solutions they need.
In the meantime, compliance is seeing a “recalibration” because regulations must evolve with the changing landscape. Technology must also be better managed because solutions must be seamlessly integrated to avoid service disruption. With more technology comes increased cyber risk management, which leads to more decisions among big tech and fintech companies regarding establishing a balanced mix of competition and collaboration. As this happens, the international banking community must reimagine its employee base. Banks are seeing an increased need for more technologically savvy people to meet their goals, diversifying the workforce in the financial sector.
The industry is not like it once was, transforming faster than ever. Below, you will read about some of the latest international banking trends and how they might influence you.
Fintech Is Disrupting the Industry
Fintech has been disruptive because it has pulled consumers away from traditional banking and toward a digital realm. Adopting application programming interfaces (APIs) has been largely responsible for the impact on banks. The connection of applications, such as mobile apps, to banks’ back offices has been enhanced. It’s a technology that the financial services industry has already used for a while, but usage is expected to grow as traditional banks collaborate with fintech companies. The International Data Corporation reported that approximately 50 percent of Tier 1 and 2 banks would offer their customers at least five APIs by the end of 2018.
This migration toward a digital presence is important because more individuals and businesses want to instantly manage their accounts on their computers, tablets, and smartphones. This has resulted in apps being able to do more than show a balance. People can now transfer money between accounts, pay bills, initiate direct deposits, and more.
Other predictions by the International Data Corporation regarding fintech include that 25 percent of banks will use micro-location in their marketing campaigns by 2020, mobile devices will be used to make approximately $6 trillion in P2P transactions by 2019, and corporate banks will invest over $2 billion in analytics and big data in 2018.
Artificial Intelligence
Artificial intelligence (AI) is another area transforming the financial sector. AI is automating processes across the industry, enhancing customer experience because of improved efficiency. It’s becoming possible for banks to give loan applicants automated decisions and use data to make life easier for the customer. Everything from machine learning to gathering data takes humans out of the equation and streames processes. AI is much faster than humans, like having another employee without a physical body. This fact drives down costs, which also benefits the customer.
Chatbots Are the New Customer Service
Chatbots are another form of AI used more in the banking industry. These are simply computer programs that are designed to chat with customers. However, they are programmed to respond to the most common queries and complete certain tasks. In the financial sector, chatbots can perform data analysis, offer customers wealth-management advice, and detect fraudulent behavior so that appropriate flags can be raised to protect customers and institutions.
Chatbots are improving responsiveness among financial institutions. Business Insider Intelligence reported that chatbots are expected to become a customer service standard in the future. Right now, this technology is being developed to make this possible.
The Blockchain Is Going Nowhere
The blockchain isn’t expected to go anywhere soon after the impacts it has already made in the banking industry. The International Data Corporation reported that 30 percent of large banks would deploy distributed ledger technology by the end of 2019. It is expected to be deployed as a Blockchain-as-a-Service platform.
While the blockchain isn’t regulated, it is expected to play a role in payments. IBM and other companies are working with banks to create platforms to transfer the technology’s value globally. Although the blockchain and its corresponding cryptocurrencies have been criticized for not being tangible, like cash or gold, banks are starting to soften on the idea and look at ways to become part of the equation.
Some major institutions are still on the fence regarding cryptocurrencies, but even those that hold back have no choice but to jump on board with the trends when not doing so could hurt growth. Goldman Sachs is an example of an institution that set up a trading desk for cryptocurrency, which adds to digital currency legitimacy. This could set global precedence for others to join in.
Meta-Application Services
Meta-loan application results. Go to a personal loan lender website, complete a single application, and receive multiple offers. This is done by organizing the information you enter to identify partner lenders that meet your needs and vice versa. Lenders have specific requirements, so the information you enter is used to determine which requirements you meet to be presented with offers specific to you.
This is a very intricate process so that the proper customer/lender matches can be made. This prevents customers from “wasting their time” with lenders that aren’t a good match.
Meta-application services are also used for such things as insurance quotes. They have been refined over the years to deliver more accurate results.
Addressing Challenges
There are many challenges to be addressed because of customer demand, a quickly evolving fintech sector, banks that want to focus more on the customer, and the introduction of technologies that some banks are reluctant to embrace. Whether a financial institution is large or small, fintech, the blockchain, meta-application services, artificial intelligence, and chatbots are trends that will touch them all. Banks can create partnerships that embrace technology by shifting from traditional thinking to an agiler and more innovative mindset. This is important since the consumer-based benefits also positively influence the bottom lines of these institutions.
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