7 new banking technologies you’ll see in the next five years
FINTECH, MOBILE, and new platforms are driving a digital transformation of the banking industry.
1. BLOCKCHAIN TECHNOLOGY
Blockchain technology is set to fundamentally transform banking and financial services. It decentralises financial management from a central authority to a widespread network of computers. Financial transactions are broken down into encrypted packets, or ‘blocks’, which are then added to the ‘chain’ of computer code and encrypted for enhanced cybersecurity. it has been compared to ‘email for money’ by blockchain start-up CEO Blythe Masters. Because the technology has the potential to improve numerous facets of banking – and is the basis for other banking-technology trends like Bitcoin – it is no longer a question of if blockchain will change the banking industry, but when, according to the Wharton School of the University of Pennsylvania.
2. UPGRADED ATMS
ATMs transformed the banking system when they were first introduced in 1967. The next revolution in ATMs is likely to involve contactless payments. Much like Apple Pay or Google Wallet, soon, you’ll be able to conduct contactless ATM transactions using a smartphone.
Some ATM innovations are already available overseas and may reach the US shortly. For example, biometric authentication, launched last year in India, and iris recognition are in place at Qatar National Bank ATMs. These technologies can help overall bank security by protecting against ATM hacks.
3. PROLIFERATION OF NON-BANKS
Banks are hoping that technology will allow them to deliver a faster, more transparent experience to consumers. A large portion of their resources, however, is necessarily dedicated to security, compliance, and other industry- specific requirements, which has allowed non-banks – or financial service providers that are not regulated by the banking industry – to flourish, according to a 2016 report from market intelligence firm Greenwich Associates. Since these companies can devote a greater percentage of their assets to cutting-edge financial technology, they might be able to innovate more rapidly than traditional banks, attracting tech-savvy customers in the process.
4. APPLE STORE-STYLE EXPERIENCE
The in-bank experience of the future might be more like shopping at an Apple store. Because so many people now can download user-friendly banking apps or easily find an ATM to handle basic banking transactions, the typical in-bank customer today is seeking help involving a personal interaction. Banks hoping to increase sales in the future are considering this transformation as a way for customers to engage more directly with the bank and its products, just like in an Apple store, directing customers to interact with tech kiosks for some transactions and reserving person-to-person interaction for answering questions or addressing needs unique to the individual consumer.
5. AUTOMATED FINANCIAL SERVICES EMPLOYEES
The rise of financial technology is likely to result in the reduction of in-bank personnel. A 2016 report from Citigroup indicated that a whopping 30 per cent of bank jobs might be lost by 2025 due to the automation of retail banking services. Even behind the front line, financial services employees might step aside as robo-advisers that manage your money continue to grow in popularity.
Wealthfront and Betterment, two robo-adviser companies, already have $4.65 billion and $7.36 billion in assets under management, respectively.
6. MOBILE AND DIGITAL BANKING
The mobile and digital transformation in banking has only just begun, and growth is already explosive. Banks are investing heavily in digital banking technology in which customers use mobile, web, or digital platforms to use banking services. In a Forbes survey on banking
customer engagement from late 2016, eightysix per cent of banks indicated that these types of services represent their top technology investments.
7. PARTNERSHIPS
Although banks can pour lots of money into technology, the fastest way to deliver financial innovation in the future is likely going to involve strategic partnerships. Fast-growing companies that already have new-wave fintech or social media platforms in place could make excellent partners for traditional banks seeking to enhance customer experience.
Card-linked marketing company Cardlytics, for example, is partnering with several financial institutions like Bank of America to leverage secure purchase data in order to tailor marketing based on consumers’ card use.
Overall, consumer behaviour and smart-device trends are steering banking-technology advances in the direction of convenience. An increasing number of remote technologies will allow you to interact with your bank right from the palm of your hand. And from your email inbox to visiting an actual branch, you can expect to encounter a whole new customer experience, perhaps even sooner than you think.
Clay Wyatt contributed for the reporting of this article.