2018 may indeed prove to be a challenging year for traditional financial institutions who face a transformation towards a digital approach in their operations. New technologies in the financial industry are here to stay, with promises to improve the customer experience and challenge core banking processes with innovative new systems and technologies.
The following are the most relevant banking tech trends for 2018, based on opinions of industry analysts, insights of banking providers and research studies of varied financial services.
Trend 1. Cloud banking
It's no mystery in this day and age that the range of cloud services available just keeps growing and growing. One of the most promising initiatives for the financial sector comes from cloud-based core banking solutions. By and large, the biggest added value of using a cloud infrastructure is the reduction of risk in day to day operations, which also enables financial institutions to improve their efficiency in all of their core processes. As Cloud Computing establishes itself as an ever persistent reality, the benefits that these products offer are truly changing the way the financial sector does business.
Trend 2. Mobile Banking
One of the biggest changes in the financial consumer landscape comes from the simple fact that mobile devices have changed the way we make our purchasing decisions, and that is not an understatement. Worldwide analysis of consumers of financial goods and services show that there is an increasing percentage of people (mostly 34 years or younger ), who consider that banking goods and services should be more readily available on mobile. This trend, coupled with the fact that by 2018, nearly 75% of the world population will have access to a smartphone, is accelerating a shift towards mobile banking that is historically unprecendented. This is the main reason why financial institutions need to adapt or be left behind. In such a traditional environment, sometimes it is hard for Financial Institutions to take the right steps to adapt to the changing landscape, but there are many fintech resources available today to help with these processes.
Trend 3. Fintech startups
Due to this massive digital disruption, 4 of 10 companies will be forced to quit the game. Precisely because of this real threat, fintech startups have become a real life-saving opportunity for many financial institutions, in order to keep up with the changes in consumer expectations. Innovative software and services are stepping up to the plate to help fulfill the needs of the modern day, tech-savvy and on-the-go consumer. Not only that, but they are revolutionizing core banking processes with automation, robotics, artificial intelligence and a host of other new technologies which are here to stay. Within fintechs there is even a specialized so-called "RegTech" which promises to manage the burden of compliance measures, offering more access to those who are currently underbanked or out of reach of financial goods and services.
Trend 4. Improve customer experience
As mentioned previously, our interaction with web and mobile services has inevitably changed our expectations in regards to our interactions with them. In every market, this has been a driving force towards change, with the consumer at the center of it all. In the financial market this is no different! In the traditional banking world, the industry suffered from slow and often cumbersome processes, and ultimately the end consumer suffered for it. But as web and mobile usage has grown larger, faster and more human-centered, a new type of consumer has also grown along with these technological changes. In 2018, financial institutions are looking forward to improve client-contextualized experiences using digital services that allow them to connect with the modern customer's needs; a more human-centered, technology-driven and painless experience.
Trend 5. Increasing automation
Lastly, but not least importantly, the complexity and sometimes unwieldiness of traditional core systems has led to the growth of artificial intelligence to simplify processes, minimize risk and overall improve the customer experience. It's worth noting that in 2018, banks all over the world are investing in AI, because it has proven to be 50 to 90 percent less costly than having fulltime employees. In such a promising landscape, automatization will serve to increase productivity, allowing employees to focus on higher-value tasks and projects. However, no new implementation of technology comes without a risk, and although AI has had its own rocky start, by 2018 one can say that the technology has finally matured. If we combine these new and promising technologies with the expertise that new fintech startups are bringing to the table, then taking this next step forward is only a matter of time.