The top 5 retail banking digitalization trends in 2016
“Silicon Valley is coming. There are hundreds of start-ups with a lot of brains and money working on various alternatives to traditional banking.” Jamie Dimon, CEO of JP Morgan Chase said this once. Chase is one of the big four American banks and the largest. This statement by Mr. Dimon is an acknowledgment of how technology or digitization is changing banking as we know it, for good.
2016 has been no exception to the trend of digitization taking over normal banking functions. This blog post is an attempt to summarize the top five such trends which took the retail banking world towards a new realization.
1. Mobile Banking
A couple of years ago if someone told me I could do all my banking activities from home using a mobile phone, I wouldn’t have believed it. But today, banking apps that can be used with a smartphone and a good internet connection have changed it all. It is the easiest way to conduct all basic bank transactions without visiting a branch. A consumer survey by MX puts an easy and efficient digital experience at 67% compared to visiting a branch and interacting with a teller at 33%. The survey also confirms that users prefer banking via laptops, mobiles or desktops (80%) compared to visiting a branch (16%) or interacting with a call center (4%). These figures indicate the mood of the consumers. Smartphone based banking app transactions are here to stay. They saw a significant rise in 2016 and will only continue further.
2. Fintech Companies
FinTech companies are the biggest disruptors of Retail Banking. Companies like PayPal, Apple Pay, Zopa are the Ubers of banking segment. A young and technology savvy nation that India is turning out to be is working in favour of these FinTech companies. The services offered include payments, personal finance management, lending, mortgage and even core banking functions. 2016 saw a deeper engagement of FinTech companies in payments and personal finance management. The rate at which technology integration is happening in banking, it may not be a far off time when FinTech companies make core banking easier and accessible.
3. Analytics
There has been a lot of talk about Big Data, Hadoop and other Analytics based technology trends in the last few years. Technology pundits have predicted analytics to be part of everything in our existence. Banking has been no exception to this trend. 2016 has seen increased adoption of Analytics in banking. Major banks across the globe are falling back on Analytics to draw key insights about customer transaction patterns. These insights are being used to customize banking services as retaining customers is a top priority. Analytics have further helped banks detect and reduce the risk of fraud.
Users prefer banking via laptops, mobiles or desktops (80%) compared to visiting a branch (16%) or interacting with a call center (4%).
2016 saw a deeper engagement of FinTech companies in payments and personal finance management.
Major banks across the globe are falling back on Analytics to draw key insights about customer transaction patterns
4. Cloud Services
IT has emerged from a support service to a key business driver in the banking sector. The global footprint of major players in banking is increasing rapidly too. The mandate today in banking is ease of use and agility. Cloud makes this possible and hence the increased investment in cloud based services. 2016 has seen close to 70% investments in private cloud deployments in the overall cloud initiatives of banking globally. That’s a huge percentage and a proof to show the acceptance of cloud in banking which has been traditionally a conservative domain. Increased agility due to cloud based services makes it easy to facilitate multi entity environment transactions.
5. Security Systems
The ever increasing use of internet, smart phones and social media for banking purposes also leaves scope for increased occurrences of fraud and data breaches. Banks are heavily investing in IT security systems. Another major trend that was noticed in 2016 is use of biometrics and tokenization for transactions. Biometrics are currently in use for mobile banking, ATM transactions and payments. It is estimated that the number of users conducting banking transactions via biometrics will reach the 1 billion mark in a few years from now.
Major trend that was noticed in 2016 is use of biometrics and tokenization for transactions.
2016 has seen close to 70% investments in private cloud deployments in the overall cloud initiatives of banking globally.
These 5 trends imply changes in the banking sector in ways that were not thought of just a few years ago. Technology is rapidly changing. Customers are becoming more and more technology enabled. With the advent of Internet of Things (IoT), there is only one way retail banking can go — progressive!
