Banking sector certainly seems to lag behind the most recent technological developments. Today we are going to take a look at the four most prominent fields where a bank can start progressing already today.
We are living in a truly changing world, in which banks will continue to transition from physical locations to an entire client services industry. The future doesn’t look like a sci-fi movie. These changes in technology, are much more akin to innovations in services. Much of the technology exists, now is the time to begin implementing it. The future holds to be promising for the client as banks enable them to be more hands off. In turn, banks stand to profit from clients being more reliant on them in their everyday lives. Here we will explore four innovations in banking that will be at the forefront of this movement.
The Transition from Banks to Banking
CCG Catalyst research suggests that the future of banks truly is the art of banking. In their latest study AskYourTargetMarket, seeking to discover the banking needs of millennials, the results clearly illustrate that millennials want their bank to be a catchall service for their financial needs. Respondents favored banks that were able to take care of bill payments, checks cashed, purchases made, and even tax services.
As banks strive to compete with other financial services online, such as Paypal and securities brokerages, they will further strive to implement a strategy that includes banking with everything else in one’s life. Coupled with this is the trend being dubbed: the concierge service of banking. This will include more immediate attention to the everyday banker; personalized visits, customized bonus programs, and realistic goal setting for the individual.
We have already forfeited much of our privacy for the sake of social media and this trend will continue as long as the client receives something valuable in return. As the financial rewards and opportunities become more appealing such as P2P and crowdfunding options, as well as the slew of alternative investing options such as 100% commission free trading, more users will warm up to the idea.
Local community banks have a tough road ahead as national and international banks employ thousands of their workers specifically in their innovations departments. Sink or swim will continue to be the mantra of the local bank. I expect them to go down with the old ship.
Accessibility will fit all needs no matter how complex or seemingly trivial
Users demanded an easier way to deposit their paychecks for the last decade and were assisted by remote deposit capture (RDC) in 2013. Similar innovations are only around the corner, not only in image transmission, as well as in the ability to complete tasks remotely that are conventionally required in person.
This accessibility will be integrated across a wide array of transactions, including those outside of usual banking. While utilizing banking tools, clients will be offered discount and rewards options at the point of sale, not necessarily from their mobile devices (phones, tablets, watches, glasses), maybe their client cards.
Visualise the option for additional rewards or discounts while buying groceries at the checkout. Even more revolutionary will be when banks and retailers can aggregate data to provide those rewards and discounts prior to the customer making the transaction, such as when customers are comparing products in the aisle or reading the menu at the restaurant.
This change leads to banks interpreting predictability. Readers will find similarities to the service Google has been using for several years, by finishing phrases typed into Google’s search bar that is useful to the client. That information exists because of the incredible amount of data Google is able to capture from users. In turn, it provides a valuable service and saves time for users.
Banks can use this technology to predict and suggest a user’s behavior. They have been styled ‘identity brokers.’ This will solve an accessibility issue that is common to impulse purchases, normally offered in investment consultation. Clients can receive assistance, recommendations, or advice simultaneously to a purchase, personally from their bank.
Imagine a qualified professional providing a better alternative brand, tailored just for you or a friendly reminder that an impulse purchase is not a desirable decision based on your banking history and future. The ability to provide such advice will further build a personal relationship with the client. Services such as PushPoint are already investing in this trend. Banks that fail to implement this connection will become a relic of the past.
More advanced and out-of-the-Box security solutions are finally being Implemented
Doubtless, the development for banks to implement a more holistic approach will include more personal information and access to clients’ personal information. Greater and greater security solutions will be forced to the forefront.
Although Mission Impossible or James Bond films might suggest biometrics security has been in place for over a decade, its mainstream use has been fairly limited. Wells Fargo has begun putting into place the mechanisms for its corporate clients to use the technology across the board. Expect the service to be desired by consumer clients moving forward. Biometrics are leaps and bounds ahead of numbers and letters. So far users are weary of such personal connections to their bodies.
It’s frustrating to have to answer security questions or receive PIN codes whenever we sign into our banking from a different device or IP address. Hacking and identity theft is not going away. In fact, it has become easier, driving the necessity of innovation in banking security solutions.
Using the data and behavior information being captured, banks make informed predictions about what their real users should and should not be doing. This already exists to some degree when credit or debit cards are utilized outside of the country and are denied.
Expect more robust solutions as superior security is implemented when users attempt a transaction outside of their normal purchasing pattern. It’s so important that Inverse believes the future of passwords is not just biometrics, it’s behavioral. One’s own unique history will lay the groundwork for the perfect password replacement.
Bitcoin and cryptocurrencies will be adopted or created as a normal client service
The lack of a central regulatory organization is just one of many ways that Bitcoins have been appealing to consumers. Financial institutions have been slow to adopt a marketable interest in the sector as a result of the lack of transparency.
Nevertheless, with the profits to be made off of Bitcoins, expect the world’s leading financial institutions to be hard at work discovering how to implement these cryptocurrencies into their offerings to clients. I don’t believe the top banks are going to be so transparent on how much of their resources they are investing in this innovation.
Fiat currency is not dead yet. Yet its physical use is becoming less and less relevant each day. About half of the world’s population still uses check books as part of its daily habit, but how much has that number changed in the last 20 years? And better yet, who noticed?
The movement of the last decade was wireless debit and credit transactions everywhere. It’s now the preferred method of transactions. This has enabled personal clients to warm up to the idea of using an entirely digital currency. After all, they never see the physical stacks of cash in their bank accounts.
Banks will continue to work hard to implement the use of cryptocurrencies such that the transition is painless and largely unnoticeable. Still, analysts have to be worried about governments and their central banks willingness to give up on their dominant authority over currency and the relative stability it ensures. Cryptocurrencies, namely Bitcoin have yet to be the darling investors and analysts keep predicting, but their existence fills a real void and a necessity for users. Expect banks to cater to that need.