TOP STRATEGIC TRENDS IN BANKING INDUSTRY TO WATCH … – Finextra
The banking industry and its technology invariably amaze us with every invention. Not only is it rapidly changing, but it is bringing up the change that we need to upgrade our economic lifestyles. The financial services industry always looks for innovations that focus on improving their services for people. The trend in the particular banking market nowadays and in the coming year will be a game changer that will certainly change the status of the banking business.
2023 has just started, so it’s the right time to get to know the latest technology trends in the financial industry to watch out for in 2023. Innovation Leaders need in order to focus on the particular core problem that the world is facing and then align the technologies to solve it. Trends will automatically be visible when aligning technologies to global/ social problems. For a whole decade plus maybe more than that – sustainability, a green planet or the alternate world, and reducing waste is the key. To me, each technology or social inclusion or awareness that will help in achieving sustainability is appreciated and qualifies to be upon the Tech Trends 2023 list.
As a Technology and Fintech Innovation Leader, I have researched plus created my list of top technology trends within the banking industry to consider in 2023.
1] Shapeless Banking
Reports say, there are more than six billion smartphones today. So , this is the particular key target for the bank industry to look forward to. Consumers are more inclined to ease of use, so
Devices of Choice are one associated with the major factors that will make banking shapeless (mobile, smart speakers or even smart watches or wearable lenses, etc . ). Another way to look at it is the
Channel of Choices Now the financial services of banks are in the particular hands of the customer.
A person with a smartphone can make purchases, transfer money, and receive money online or even offline. If we can do the same with Smart Speakers, Watches, Smart Lenses, and Smart Cars, then it will ease the way of banking and also give rise to shapeless banking. This makes society more connected, and every linked smart device is the primary interface between the real and digital worlds and therefore gives users various options through Options of Products and Channel of Choices. In the way associated with saving energy whichever device is charged and connected, users are good to go.
2] XYZ Now and Pay Later
Effective initiatives of social financial addition services have the upper edge, with the increase inside the cost of living, and high-price energy, as a result, the Pay Later concept has taken a new height in Banking Industry. The BNPL is one such technologies trend in the banking market we are usually observing its expansion horizontally, and in 2023 we will see vertical growth as well. The particular BNPL has eliminated an additional step that was earlier the pre-requisite before we buy anything and that is the credit card requirement. With BNPL applying for credit step is a part of the process when a consumer reaches the checkout stage from the products, making the credit or lending business frictionless.
The Buy Now plus Pay Later on (BNPL) movement is taking its stance in the consumer marketplace now, it’s a scheme that benefits business owners and the financial industry. It’s another line of credit score for customers in order to buy and pay later for the particular product, customers can decide on any future day when they will start paying back without any kind of interest. When a customer uses these services, he or she does not have to pay or activate credit or debit cards and simply enters other information to complete the purchase. Instead, the bank will pay for this, after which, under certain conditions, you can repay that bank when you obtain your salary or cash from any other source. BNPL is growing rapidly in both developed and developing countries. Similarly, you might have seen, Fly Now Pay Afterwards, Study Now Pay Later, and many such Spend Later schemes on the queue that people will certainly see in 2023. The best part to support social monetary inclusion is to equip regulators to control risk. Therefore , Regulators need to step up and amend the clauses to line up with XYZ Now Pay out Later framework. If we upgrade and change the traditional regulations with innovative ideas there is a way to progress or else we won’t progress if we align innovation with traditional limitations.
3] Digital Only
The virtual world not only sounds appealing, but it is also a game changer in the particular banking sector. It is the top trend nowadays because it supports a circular economy. Digital-only banks offer various solutions that relieve the banking process within many aspects. Every individual can take advantage of global payments, p2p transfers, trading with the most trending digital assets, digital currencies or cryptocurrencies, and more.
As we always expect more from our banks, we want them to innovate so that will we don’t have in order to go to banking institutions or keep mobile while the only alternative. Whenever we need to receive money or even make a transaction a well-connected device with an impressive cyber security layer may be able to solve the problem. In this situation, digital-only banks backed by smart devices are thriving in order to meet customers’ needs that they always demand from their own traditional banks. That’s the particular future of industry Digital Only means –
superimposing Banking using the Internet and IoT in terms of reach and capability.
However , on the internet finance comes with the threat as well. According to cyber protection statistics, on-line financial transactions are the most common type of internet crime. In terms of digital-only, they offer more safety and affordability with convenience, making all of them more susceptible to risks and economic fraudsters on the internet.
Despite digital-only innovation, banking institutions must find a way to eliminate physical brick-and-mortar locations. In case a customer’s transaction becomes stalled or encounters a problem, the just option will be to visit a physical branch. Physical plus digital financial collide to deliver a very advanced client experience. So, they are separate, but they are entities working together to make a difference.
4] Development in Cloud Technology
As we know, the biggest issue a bank can face is space, service, speed, and cost associated with it. For that matter, Banks buy millions of dollars worth associated with online area to store every entity involved with their particular institutions. Impair technology is usually the quantum leap in that citation. It enables businesses and banks to maintain all information in a virtual space, free of physical room constraints. This is fascinating from the bank’s perspective because they will now add more data regarding anything, including clients and what these people do with their accounts. Furthermore, cloud technology offers better storage scalability and collaboration, delivering the best banking providers through consumer relationship management (CRM). This particular certainly has more efficient customer data consolidation and interaction. So far, adopting a cloud solution meant recognizing factors like cost, scalability, and latency for end-users. Nevertheless , carbon emission is usually a different and unique factor that deserves to become at the particular top of the merit and approach for cloud migration.
In 2023 investors and development leaders may be interested to see automation and acceleration within Cloud Migration, that is, Immigration with a minimal number of clicks with high speed.
Energy plus resource reduction in cloud migration efforts will help in channelizing Innovating much better solutions like getting sports streaming powered by 5G and web 3. 0. Web 3. 0 Advancement toward producing Cloud Decentralized will draw attention and the have to align this with green energy, plus sustainability is the key. Similarly, the customer communication domain in banking would end up being powered by 5G and Metaverse (an area to watch out for).
5] Interlacing Baas (Bank as a Service) Through Non-Banking Channels
Bank like a Service is another disruption within the technology trends in the banking industry. It is a system in which the banking institutions can provide services to other institutions through open APIs, 5G, and other related technologies. This creates a greater consumer service list plus an open ecosystem for that bank industry. The industry is definitely observing an increase in the particular quantity of financial organizations, non-Bank financial business houses, and vendors focusing on a range of innovative financial services with the help associated with Banking-as-a-Service.
Inside 2023, we may see a great volume of BaaS getting interlaced along with non-Banking platforms like Amazon, eBay, and many eretailers as well as the reason can be consumers explore banking services more through these channels but visit Banking websites or App only with regard to a limited transaction or account balance check purpose.
We may see an underwriting risk as one of the particular areas that will have major shifts in bank card issuing. For example , Goldman Sachs and Wells Fargo & Co. are the credit card issuer regarding Apple Inc., for Bilt Rewards, a good emerging fintech company (a rent payment fintech) respectively.
Another one is certainly Merchant onboarding at scale, which can enhance the framework like a high volume of merchants/ start-ups is expected in 2023 with all the right concentrate on sustainability.
6] The Zero Trust Policy and Cybersecurity Technology
An additional outbreak associated with technology styles in the banking industry is the “Zero Trust” policy. Most customers have always been concerned about bank cyberattacks. They are right, although banks possess finally introduced much better technology that will force them in order to strengthen their data security measures, the concept of “Zero Trust” means that no devices, networks, or something related to them will be trusted. Every loan company system access request may be validated and checked with the complete authentication process. This particular has made the banks more secure than ever. While we have got read the idea of shapeless banking with more devices finding included in the financial system the particular Zero Trust policy will become an integral part associated with banking.
7] Intellectual Property as New Revenue Generation Channel
This one I possess taken from my last year’s prediction as it is still relevant. Intellectual Property refers to the creation of the Human Mind. The most popular forms cover – Copyrights, Patents, Trademarks, plus Trade Secrets.
This particular needs thorough research to understand – what is available within the market and what is not really. Accordingly, decide your area of work as all of us all understand – it is a time-consuming process, and research is the basis of the particular invention. A grant takes at least 18 months (including all examinations and hearings process). Lots of legalities, better hire the reputed patent attorney as it requires legal knowledge at every step, right from Novelty Reviews to Patent examination proceedings until the grant.
The First Technological innovation/ particular fight was between Steve Jobs and Bill Gates
Then another example will be the controversial Google Earth, which is usually again similar to the particular product invented by two young men in the 90s is the “Virtual representation from the Planet through Satellite”
During the patent fight among Samsung plus Apple, people were simply aware associated with one thing — only big organizations have the minds to innovate (Apple, IBM, Google to name a few) rests are just a replica.
Time offers changed, the particular mindset provides changed, and now the power of Human Creativity and Innovation can see new heights within 2023, and it will be around the positive side in coming years because possibilities of infringement will decrease with more consciousness.
8] Green and Sustainable Web a few. 0, Blockchain, Metaverse, NFTs
Blockchain can be another great technologies trend within the banking business. It consists of some distinctive characteristics, such as the data involved in the banks being stored on multiple computers with zero single person having overall control. Other than that will, the data will be encrypted, which means these entities will only be upgraded simply by the people who have the cryptographic keys. Last but not least, the changes can only be made whenever everyone along with a say in them agrees. The particular blockchain has made finance for clients more secure plus safe. Every bank organization that opens up the general data will certainly be in the hands associated with owners and stakeholders, not everyone.
Referring to the Cambridge Bitcoin Electricity Consumption Index – the volume of electricity consumed by bitcoin mining a year could boil enough water for all cups of tea consumed in the UK for 30 years. Therefore, the need for green plus sustainable blockchain arises. Eco-friendly NFTs are also in need, and Ethereum 2 . 0 may be a game changer in this field. CHIA, IOTA, Cardano, and more are a few cryptos that are environmentally friendly and assistance green sustainable blockchain that uses smaller devices, with less power consumption, and reduces e-waste to arrange with the circular economy. Research also suggests that Metaverse in Customer Communication may play a major role plus support the circular economy.
9] Client Experience : Super Application
Super apps are those that contribute to the services a particular company offers. The most common services are food delivery solutions, digital wallets, Uber, and more. All these services are usually brought with each other in 1 app, which provides accessibility to ease the particular customers’ pain.
The best example is definitely India’s Adani One – an integrated travel platform that will packs within convenience, control, and comfort. It offers poshness to book flights, meet & greet assistance, pre-order duty-free products, cab providers at airports and hotel stays. These all are from the Embedded Finance domain. Likewise, in 2023 Customer Experience via
Banking One will be the main focus. This may include the spectrum of services that banks offer – all customer services, such seeing that current balance, transactions, loans, mortgages, investing, cross-border remittance, digital property, digital purses (crypto or even CBDC enabled), and so on.
10] AI-powered Inclusion
This AI technology offers achieved some great levels in the particular banking market. Not only that, it has some great social advantages as well, especially for people with disability and who need assistance or making banking easy intended for all. Right now, over 51% associated with bank customers use this particular technology. The voice-enabled digital assistants use users’ smartphones to get assist and understand the banking policies and how to proceed with a particular task.
Similarly, those who cannot speak or hear can do banking through smart devices which are visually rich along with banking emojis – withdraw money, transfer money, invest money, gift cards, plus more.
One more worth mentioning is the inclusion of GenZ and Gen Alpha, by introducing them to durability driven monetary services by means of AI-powered gamification.
11] Lasting Future of Money
In the last couple associated with years, we have witnessed a revolution inside digital foreign currencies globally. Swift progressions in technology and people across the particular globe reduced using cash transactions, an outcome of the pandemic, and have accelerated it. The particular way Social Distancing & Lockdown has become a part associated with our daily vocabulary, similarly, within the coming days’ Stablecoins, Cryptocurrency, Central Bank Electronic Currency, plus Sustainable & Circular Economy will end up the part of the regular vocabulary inside the Financial and Financial Services domain. Here is the description of each term which will define the Future of Money —
Stablecoins are usually cryptocurrencies devised to lessen the volatility regarding the value of the stablecoin, comparable to any “permanent” or “stable” asset. The stablecoin can be clinched to a cryptocurrency, authorization money, or even exchange-traded materials this indicates it can be expensive minerals associated with modern alloys.
Examples of Stablecoins : There are a lot more than 190 confidentially revealed stablecoins for example Tether, USD Coin, TrueUSD, Gemini Coin, DAI, and so forth. There can be an event for almost all authorization currencies to possess a good equivalent electronic currency.
JPMorgan’s JPM Gold coin, which has been announced recently is certainly one associated with the examples where special organizations promoting their private essentially a competitive and agile means of compensation.
Cryptocurrency is an internet-based mechanism of change that uses cryptographic functions to handle monetary events. Cryptocurrencies leverage blockchain technology to realize decentralization, transparency, including immutability
c) CBDC – Main Bank Digital Currency
The digital fiat currency that is Central Bank Digital Currency is the electronic mode of authorization foreign currency that means establishing a currency as the capital by government regulation plus the law. It may reduce the layer and may work in B2B plus B2C and peer-to-peer environments effectively. Since CBDC works on the principle of the particular circular economic climate – reuse, recycling, plus reducing waste (e-waste, paper waste, physical storage waste materials, and more), could be reliable as a potentially regulated future of money.
Throughout the outbreak, digital transformation has been triggered every bank is walking within the digital transformation street. From 2023 onwards, Banking institutions have to move with velocity for the Only-Digital highway that will become powered simply by 5G and Web three or more. 0 (Blockchain, Metaverse, plus CBDC). Products like BNPL that enhance customer experience and reduce friction will be upon top. Efforts in making minimal electronic waste, interlacing circular economy, and sustainability from a technology point-of-view will be in the track to qualify the uptrend list through 2023 onwards.