Renowned analysts like Deloitte or Forbes are usually on point with their forecasts about the future. Yet, nobody could’ve predicted that a pandemic would take over the world. Everyone was forced to regulate their schedules daily due to the ever-changing atmosphere that is present since March of 2020. Since that day, future trends of banking experienced a major shift.
Coronavirus has proven to us that most of the companies weren’t ready for the future. In fact, Deloitte claims that between 800 executives around the world, 75% percent of them stated that pandemic has compelled them to face the fact that they’ve been unprepared all along.
Financial institutions or banks were not an exception since the IMF has taken serious measures and published reports to prevent any vital losses for them. However, the end result is not so glamorous, as Fitch Ratings underlines that many FIs are going to suffer from deep economic scars.
Under the light of these, being able to adapt for the future gains further importance. Lessons must be learned from 2020 and a mindset which is centred around the primary values of the future must be deployed. This way, a proactive approach can enable many institutions to be protected against irremediable consequences. Speaking of which, what is awaiting the FIs in 2021 and beyond?
One Key Component – Three trends to Implement
Among the three rising trends of 2020, deriving from their impact on the product and service, it is quite reasonable to expect them to keep growing further and further. There is one common denominator within those trends as it repetitively plays an important role. And it is self-evidently the future of banking trends.
On-Going Digital Banking Transformation
The world’s been turning towards a more digitalization-focused future for more than a decade now. From mobile apps to developed user interfaces, many transactions are being operated via digital solutions. Also, contemporary technologies like AI, machine learning and deep learning have emerged to constitute opportunities for various scenarios within digital transformation. For example, being able to disburden many employees by introducing an AI-centred automation function certainly lies in the future of FIs.
Not only that, the global pandemic has pushed many institutions to carry their businesses out in a digital environment. Coordination and cooperation between middle offices and other branches of banks is a prerequisite for a well-functioning institution. Thus, improved internal communication and holistic monitoring options gained importance more than ever before. Therefore, obtaining a well-built interface is certainly on the to-do list for many institutions in 2021 within the boundaries of current digital channels.
Customer Experience, Big Data and Personalisation
The promise of customer experience got recently discovered and it’s undergoing a rapid popularization process. Neither individuals nor other formations like SMEs are treated as just minor pieces of a monetary transaction.
Tailor-made solutions are demanded more than ever since many FIs adopted a customer-centric approach. However, this is also quite difficult to acquire. So, there must be a helping hand for them to operate such detailed activities.
Enter Big Data and AI. Personal data collection has become the norm for a respectable amount of time. Luckily, AI is developed enough to mine those data accordingly and extract necessary information. This information is further used to enhance the user experience by personalised transactions.
As an illustration, when a SME applies for a loan, a well-built AI can form a personalised report by processing that SMEs big data. This way, both parties, the banking industry and the applicant themselves are disburdened from the heavy workload of juggling through countless documents. Not only that, the customers feel valued since special attention has been directed on them thanks to the AI and Big Data. This way, customer experience is enhanced further through the user-centered design.
Cyber Security for Financial Institutions
Although digitalization is appreciated as a positive factor within various financial institutions, it might also end up damaging FIs real-time. Since the network channels are exposed to attacks more than ever in connection with working from homes, cyber security matters became immensely important.
Contemporary routes like open banking are gaining recognizable importance, yet the threat of a digital attack is haunting everyone from central banks to credit unions. Plus, insurance companies have been struggling to adapt to this wave of digitalization. Thus, each institution has to come up with individually designed AI-focused solutions.
What is Robotic & Cognitive Automation (R&CA)?
The common denominator stated above is AI, as it can be seen as the driving force of each future trend to follow. So, a special mention should be made with regards to the future of AI itself. Robotic process automation (RPA) has been in the service of FIs for a considerable amount of time. The scenarios that include automation can serve as examples.
What about the cognitive part? Traditional RPA software processes a vast amount of data and acts upon the results. When they gain cognition via the support of AI, NICE’s report states that they are able to automate more complicated scenarios where there is less guidance given through previous data. Thus, one can say that automation gets smarter and freer with the addition of AI.
Brokerage firms, as an example, can benefit from robotic and cognitive automation when it comes to juggling through risky scenarios. They can let the AI and RPA do the scouting and act upon the findings to act in a more solidified way. In addition, commercial banks can operate their risk management better thanks to R&CA.
Some trends are so impactful that in 2021, the future will be ridden by them. AI and data processing will play the most important role by enabling FIs to operate heavy workloads easier.
Moreover, they will guide the direction of the change through a more digitized world from this year and beyond. Therefore, having foresight about which way to advance is quite important. Under the umbrella of AI, easier solutions are what each FI seeks.
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