Digitalization Making Banking Sector more Consumer-Friendly

Banking CIO Outlook | Monday, July 29, 2019

The digital revolution in financial services is underway and has the potential to simultaneously create a better, cost-effective and faster banking service for customers.  

FREMONT, CA: Fintech has brought unparalleled disruption in the financial services platform. Conventionally fintech was used for back-office functions by leveraging software to help banks manage customer databases and execute transactions. Now it has DIY modes where customers rely less on a brick and mortar bank for their banking needs and have a multitude of digital channels at their disposal. With 24/7 device-agnostic admittance, virtually every transaction is now digitally achievable. Digitalization has fundamentally transformed banking as known. Payment apps integrated with bank accounts allow seamless mobile to mobile payments, online payments, investments and transfers.

According to a report, 39 percent of shoppers today prefer electronic payments. Some fintech trends give more power to digital payments. Omnichannel banking being the first one, enables customers to use online, social, mobile channels. There has been a steep decline in customers attending the favourable neighborhood branch. Automation, Machine Learning (ML) and Artificial Intelligence (AI) for most of the banks mean technology and people working in tandem. They have not only replaced tedious back-office work with capable machines but also used the intelligence assembled from the process to fine-tune financial services.

Biometrics for immediate authentication is an astonishingly fast process. It takes away the impediment that comes with multiple passwords besides providing advanced validation techniques. Many banks have started investing in biometrics-based authentications that utilize the smartphone cameras for scanning the iris and the phone’s inbuilt fingerprint scanners.

Growth in blockchain provides transparency, minimizes risk, human errors and transactional fees. The distributed ledger system of blockchain grasps stringent controls facilitating smart contracts and auditable data. Blockchain offers the perfect trading platform for securities exchanges — legacy financial institutions looking to become digital-enabled face two main challenges. Digital innovation and no longer works have disrupted the business models and personal skills that have served the industry well for decades in the new banking ecosystem.

Success will rely on how banks promptly respond to possibilities of innovation. The tactics should be to stay attentive on growth with digital innovation at the core. Even as the digital disruptions recapitulate, the ecosystem will see deeper collaboration between financial organizations and fintech firms.

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