The COVID-19 outbreak has severely changed the development vector of different industries throughout the world, and the banking industry is not an exception.
The financial institutions are now looking for opportunities to quickly implement various banking industry trends and digital solutions that will help them to transform their current business model, enhance the efficiency of the operations and improve competitiveness on the banking market as well.
According to Deloitte’s recent research, these changes in the banking industry have opened up new focus areas for the businesses, such as cybersecurity, advanced analytics, robotic process automation, cloud computing, etc.
Moreover, around 84% of banking institutions consider AI solutions as one of the main priorities for improving their competitiveness in the current industry market
In this article, Intellectsoft will explain what emerging trends in banking will be popular in the upcoming years and what benefits they can actually bring to your business in 2022.
Banking Industry Trends to Keep an Eye On in 2022
This is one of the latest banking technology trends that will even keep picking up the pace. The pandemic forced brick-and-mortar banks to reduce their working hours or temporarily close branches until everything settles down.
More and more banks provide their services without having a physical branch. The only thing clients need to do is to use their preferred device to open a bank account and use their finances.
This is a cost- and time-saving solution for both banks and clients and the competition has already started extending.
Such an approach grants uncomparable flexibility and, what’s even most important for clients, digital-only banks offer their services at lower rates as there is no need to maintain a brick-and-mortar branch so this is a real threat to traditional banks.
1. White Label e-Wallet
The pandemic has stimulated users to try a new format of payments they’d like to use further – digital wallets. In general, that’s a contactless form of mobile banking that enables completing the transaction anytime and from nearly any iOS or Android device.
At the same time, it allows businesses to provide a personalized customer experience while eliminating the high costs and time for developing the system from a scratch.
According to the predictions of Allied Market Research, around 4 billion people will be using digital wallets as the main payment method by 2024, so such digital banking trends are simply a must for the institutions that want to be at the top amongst competitors.
2. Self-Service Applications
One of the most valuable online banking technology trends, especially for millennial banking is self-service apps. Basically, they enable customers to make a list of financial transactions such as deposit or withdrawal, inquiry, transfer, bill payment, loan, currency exchange, and lots of other wealth management directly in their in-app profile.
At the same time, various businesses within the banking industry can improve client engagement, optimize and automate most of the services that are currently offered on the banking market.
Thus, clients no more need a physical presence to conduct any sort of banking transactions: all these are already included in their banking app!
3. Cross-Platform Services
In fact, transactions are closely involved in other industries such as healthcare, insurance, hospitality and retail banking. That is why embedding cross-platform payment methods, such as mobile payments or hybrid wallets can significantly raise the income of the businesses and financial institutions they’re cooperating with.
A notable example of the utilization of cross-platform services is the Payment Program of the WeChat app in China. The embedded payment in-app services allow businesses and entrepreneurs to quickly conduct the transaction within a few seconds while not compromising the application security.
Moreover, this digital banking trend is much easier and faster to launch and maintain, and is between 15% to 50% more cost-effective compared to the native apps!
4. API Implementation
In the banking industry, API or Application Programming Interface enables synchronization, linking, and connection of the database of service with any application. It works as a so-called bridge that ensures the secure transmission of personal information without involving third parties.
At the same time, the API trend in commercial banking and private banking makes these financial institutions more transparent and secure, which surely is a great benefit for businesses, their clients, and of course, the financial institutions themselves.
The other great advantages of the API banking trend implementation are the cost reduction and increased income, workflow optimization, and eliminated time for transactions completion as well. Thus API implementation is among the top banking trends for 2022.
5. Video Banking
Another emerging banking trend is video banking technology – a great opportunity to enhance the workflow by optimizing the remote services for their clients. Such an approach provides a better engagement of customers with their financial institutions and enables the online processing of different in-person procedures.
This banking trend is especially beneficial for investment banking and consumer banking. Moreover, this enables bank specialists to be always available at the exact time the customer needs, so the bank doesn’t always need to be local to the client.
Thus, video banking can optimize the various banking processes to provide as smooth and effective client service as possible. At the same time, workflow optimization and automation allow financial institutions to reduce the time and costs needed to process any client request.
6. Online and Mobile Banking Experience
Online and mobile banking experience is already common as it’s extremely convenient for most people. In fact, in spring 2020 many banks experienced a 200% rise in mobile app registrations.
Respectively, it resulted in a declined number of physical branch visits as self-service automation enables clients to perform many actions on their own.
However, it’s worth noting that, at the same time, the demand for an expanded range of mobile banking features is growing exponentially.
Users are expecting to completely substitute their cards with an app and use it when withdrawing cash in ATMs, put a temporary hold on a card, use facial recognition or scan fingerprints when entering the app, view spending statistics, cancel service subscription payments, etc.
It’s crucial to understand and satisfy these needs for retaining the existing clients and attracting new ones.
7. Open Banking Gains Traction
Such an increased interest in online and mobile banking has contributed to the advent of new financial innovation called Open Banking.
A growing number of countries worldwide are planning to implement Open Banking initiatives and leverage the enormous potential of APIs. This is a perfect way to achieve a connected holistic banking experience for clients.
Basically, this technology will enable clients to easily consolidate and access their financial data from multiple institutions and organizations through open API for a seamless and impeccable experience.
The adoption of this technology will lead to Open Finance that makes it possible for third-party providers to access clients’ financial data after their consent.
8. Contactless Payment Methods Over Cash
The latest crisis has significantly impacted people’s lifestyles and has formed new behavior patterns. With the reduction of real-life interactions, people opt for online transactions and digital payment methods.
Some countries even expect the complete abolishment of cash and switching to solely digital financial transactions. In its turn, such a transition of banks to a cashless society will reduce costs related to handling hard money.
It will be much easier for banks to analyze digital transactions and get an overview of clients’ expenditure patterns.
9. Artificial Intelligence for Increased Personalization
Artificial intelligence is being implemented in many industries and the banking sector will broadly utilize this game-changer to increase clients’ personalization and overall service use convenience.
AI and machine learning will be actively used to provide clients with real-time tailored financial recommendations to ensure a smooth experience.
In addition, this innovative technology will help banks to predict clients’ behavior, perform risk management, reduce fraud, identify banking technology trends, and analyze the competition.
10. Shift to Composable Architecture
Many banks are predicted to switch to composable architecture to let them effectively respond to potential challenges and crises in the future.
The transition can be done step-by-step and it is a perfect agile and scalable solution for financial organizations that will help optimize many internal processes.
This is why broad investment in the transition to composable architecture is a banking trend for the future year.
11. More Complex Cloud Environment
From now on, banks and financial organizations are starting to create more complex cloud environments and actively benefit from the enormous potential of cloud computing technologies for efficient remote operations.
Such organizations have to process a huge amount of data on a daily basis and making the information easily accessible will be possible only with the increased use of cloud computing.
This solution is very scalable and cost-efficient and most financial institutions are predicted to embrace this innovation in their favor.
12. Robotic Process Automation for Higher Efficiency
Robotic Process Automation or simple RPA is another hot banking trend that institutions will try to adopt for increased productivity and efficiency.
This solution can significantly save the budget and substitute or assist human employees with a wide range of tasks to minimize error, maximize accuracy, and significantly improve clients’ experience.
Companies of all sizes invest to leverage this amazing solution that soon will rock the world of banking.
13. Focus on Cybersecurity
Taking into account that most transactions and financial operations are processed online, companies will pay extra attention to their cybersecurity to protect all the sensitive data and ensure the highest security level of clients’ financial information.
Such data is an easy target for hackers so to avoid financial loss and reputational damage, cybersecurity has to be a top priority for all industry players.
Summing It Up
As the situation with coronavirus spreading remains uncertain and the crisis continues, no one knows exactly when the dust is going to settle.
Companies might still encounter new challenges, opportunities, and discoveries so it’s mandatory to keep a close eye on the situation, monitor the market, and focus on customers’ behavior to quickly adapt to arising circumstances.
Don’t miss a chance to get in touch with our specialists and discuss potential opportunities that will help you implement the latest innovations to take operations to the next level and keep up with the banking technology trends.