Twenty years ago, the thought of using a mobile application to service a bank account was only a vision of the future. Currently, investments in modern technologies in banking are a necessity for any financial institution. The current trends in the digital financial industry create enormous growth opportunities, while introducing a certain level of uncertainty about the future of the entire financial sector.
An increasing number of financial technology companies, the so-called Fin-Techs, create uncertainty among traditional banks. However, there is no escape from progress, and consumers are increasingly sympathetic to the changes being made.
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What impact modern technologies in banking have on the market
Banks and other financial institutions need to understand that the implementation of digital finance solutions is inevitable as it improves the company’s efficiency and profitability. The ultimate end-user of banking services will also benefit from the technological revolution.
Strong competition in the financial services will force a reduction in the prices of banking products. Additionally, the advancing globalization and minimal interest rates will also contribute to greater availability of cheap money.
The World Bank estimates that almost 2 billion people in the world today do not yet benefit from an organized financial system. Most of these people simply don’t have the cash to put them into a bank. However, most of the world market is still underutilized due to a lack of adequate infrastructure.
India is an excellent example of a country with great opportunities in the financial industry. A report published by The Paypers shows that 20% of the country’s inhabitants do not have access to banks. However, in recent years, India has opened up for modern banking technologies and introduced Fin-Tech services, which generated $ 31 billion in 2020 alone.
Modern financial firms entering a growing market can operate almost without competition. It is also very easy for them to raise capital, because investors are aware of the potential of Fin-Tech technology, and are willing to invest their funds there.
The European market and modern technologies in banking
There is also a lot going on in the European market when it comes to technology companies operating in finance. The best example here will be the British Revolut. Operating since July 2015, Fin-Tech offers its customers a free account and a multi-currency card. In 2018, Revolut obtained a banking licence, which made it a full-fledged bank.
The British Fin-Tech also coped well with the UK leaving the European Union. Revolut transferred its European clients to Lithuania, where it got the above-mentioned banking licence.
The biggest advantage of using the Revolut application is currency exchange at a very favorable interbank rate. Customers can also create multiple accounts in different currencies on their own. You can exchange currencies and transfer funds to an account in another bank at any time.
Setting up your first account in Revolut is very simple. You can do all the necessary steps in the bank’s mobile application. After installing the application, you register as a new user and then verify your identity. Confirmation of the account holder data consists in taking a photo of the identity document and face.
The Revolut account can be topped up with any payment or credit card that allows online transactions.
Blockchain and cryptocurrencies
Blockchain technology is one of the trends that has put a lot of pressure on financial systems. Cryptocurrencies contribute to lowering the costs of servicing financial transactions and increasing their speed. International peer-to-peer transactions pose huge competition to traditional platforms
The largest payment companies such as Visa or Mastercard, after initial reluctance, began work on incorporating blockchain technology and cryptocurrencies into the platforms they manage. It’s all based on the principle that if you can’t beat someone, join them.
Big data and modern technologies in banking
Banks and other financial institutions have huge amounts of data about their clients. Properly processed data can become a very valuable source of information for the company.
The term “big data” defines a set of data that can be subject to advanced analysis using special algorithms. These are both structured data, that is, information, as well as completely disordered data. Banks can use this information in different ways:
- Assessing the credit risk of specific clients
- Detection of potential frauds and irregularities
- Segmentation and setting target markets
- identification of current trends
Automation and artificial intelligence
Modern technologies in banking, in the form of applications that automate business processes, will have a huge impact on the entire financial sector. Many workers will be replaced by “digital robots” that can work non-stop without making mistakes.
Properly programmed “robots” can, for example, imitate human behavior when using banking services. Testing products in this way before introducing them to the market will allow them to improve and eliminate potential errors.
Many banks already use specially adapted chatbots to service their customers. Thanks to this, customer service departments can be open 24 hours a day. It also allows to significantly reduce the company’s operating costs.
Intensive work is also underway on automatic machines for making telephone calls with customers. Special programs listen to recorded calls and learn to conduct simple conversations or provide information.
Mobile payments as modern banking technologies
The number of customers using banking mobile applications is constantly growing. According to data published by Forbes magazine, in 2019 the number of mobile application registrations increased by 71%. Some banks, on the other hand, saw an 85% increase in the usage time of their applications.
Obviously, such a large increase resulted from the growing popularity of modern mobile phones. The decrease in physical cash turnover every year may also be of great importance. Mobile payments are a convenient alternative to traditional payment methods.
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