The banking sector has undergone a sea of change in recent years, with emerging technologies driving much of this transformation. From digital-only banks to AI-powered chatbots, fintech is changing the way we bank. And as these innovations become more widespread, they’re likely to have a big impact on the future of banking. Here are some of the most important tech trends that are shaping the future of banking.
Digital-Only Banks
One of the biggest changes in banking in recent years has been the rise of digital-only banks. Also known as neobanks or challenger banks, these institutions offer banking services entirely online or through mobile apps. They don’t have physical branches, which helps them to keep costs down. And they often have more flexible products and services than traditional banks.
Digital-only banks are growing in popularity, especially among younger generations. With their on-the-go lifestyle, these types of banks make you view your credit conveniently through your mobile devices. In the UK, for example, over half of 18 to 24-year-olds say they would consider opening an account with a neobank. And in the US, around one in four millennials say they would switch to a digital-only bank if given the chance.
AI-Powered Chatbots
The banking industry is under pressure to keep pace with the ever-changing landscape of technology. One of the most significant tech innovations in recent years has been the rise of artificial intelligence (AI)-powered chatbots. Chatbots are computer programs that can mimic human conversation. They are designed to make it easy for customers to get answers to their questions without having to speak to a human agent.
Bank of America was one of the first banks to experiment with chatbots. In 2016, they launched “Erica”, a chatbot that could help customers with tasks such as checking account balances and finding ATMs.Since then, other banks have followed suit and developed their own chatbots. These include “Kai” from Capital One and “Banking Bot” from USAA.
Chatbots have the potential to transform the way that banks interact with their customers. They can provide a more convenient and personalized experience that is available 24/7. In addition, chatbots can help banks to save money. They can handle simple customer queries without the need for human intervention. This frees up staff to focus on more complex tasks.
The future of banking is likely to be powered by AI-enabled chatbots. They will become an essential part of the customer service offering and will help to drive down costs.
Frictionless Payments
Frictionless payments are another big trend that’s reshaping the future of banking. With frictionless payments, customers can make purchases without having to enter their card details or go through a lengthy checkout process. Instead, they can use their fingerprint, facial recognition, or even just their voice to confirm a transaction.
This type of payment is becoming increasingly popular, thanks to its convenience. And it’s not just customers who are benefitting; businesses are too. Frictionless payments can help businesses to reduce shopping cart abandonment and increase sales. Also, some businesses may be based on fintech app development and sell their services to e-commerce stores.
Cryptocurrencies
Cryptocurrencies are another big area of innovation in banking. These digital assets are often used as an alternative to traditional currency, and they’re becoming more popular all the time. In fact, there are now over 1,500 different cryptocurrencies in existence, with a total market capitalization of over $200 billion. There are even auto trading bots like Quantum AI that will do the trading for you.
While cryptocurrencies are still a relatively niche area, they’re likely to become more mainstream in the years ahead. This is particularly true if central banks start to issue their own digital currencies. But even if that doesn’t happen, cryptocurrencies are likely to have a big impact on the future of banking.
Blockchain
Blockchain is the technology that underpins cryptocurrencies like Bitcoin. It’s a distributed database that allows transactions to be processed and verified without the need for a central authority. This makes it incredibly secure and tamper-proof.
Blockchain is already having a big impact on banking. Many banks are exploring how they can use blockchain to streamline their processes and make them more efficient. For example, banks are using blockchain to settle trades faster and prevent fraud. And some are even using it to issue loans and process payments.
Virtual Reality
Virtual reality is another emerging technology that’s starting to have an impact on banking. While it’s still in its early stages, there are a number of potential applications for VR in banking. For example, banks could use VR to train staff or provide customer service. And they could use it to create virtual branches or ATM machines.
What’s more, VR could also be used to enhance the customer experience. Banks could use VR to give customers a tour of their products and services. Or they could use it to provide interactive experiences that teach people about money management.
The future of banking is likely to be shaped by all of these technological innovations. Digital-only banks, AI-powered chatbots, frictionless payments, cryptocurrencies, blockchain, and virtual reality are all likely to have a big impact on the way banks operate in the years ahead.
