Revolutionising Banks with Technology
In the UK, an estimated 53.7 million individuals have a bank account, whilst worldwide 3.8 billion individuals have a account. With card payments taking over cash payments, banks and the financial industry hold a central focus in people’s lives as they look after people’s money, therefore they have huge responsibility to ensure their services are the best they can be and safe. The financial industry has been adapting to the increasingly digital environment, but there are many changes which still need to be implemented.
Fraud continues to be an ever-growing problem for banks, with losses increasing yearly. From 2011 to 2018, the UK saw an increase in online banking fraud from £51.2 million to £123 million . Online banking is an experience which gives control to individuals to be able to manage their finances and spending easily. However, with technology advancing and criminals coming up with increasingly creative ways to steal money, individuals’ trust in banks decreases, and paranoia increases. With banks holding people’s entire monetary savings, fraud creates not only economic cost but huge social cost to individuals, who may be left penniless after a fraudulent act and in emotional distress.
As Michael discussed, data breaches are becoming frequent and intensified by the internet, therefore action is needed. Microsoft has developed AI technology which detects and acts against fraud. Banks should implement similar technology on a large scale in order to combat fraud online and on mobile banking, which remains insecure. This technology, aside from its obvious advantage of protecting users, could lead to wider use of online banking as it provides reassurance to those individuals who are wary about using the current technology. This potential change would have immediate benefits in terms of better security and lowering monetary loss due to fraudulent activity, and in turn increase trust.
A challenge has also arisen for banks through Fintech. Fintech is “an economic industry composed of companies that use technology to make financial services more efficient”, they offers innovative solutions to current traditional banking problem and priorities a customer-centric approach. Their smart solutions offer customers services which traditional banks just can’t compete with. For example, enabling customers to get loans even with poor credit history, leaving banks to look narrow-minded. So, with Fintech offering what banks currently can’t, it’s no surprise that Fintech is growing rapidly, just in the UK almost 40% of Fintech companies had an expected growth of 101% in a year.
However, all hope is not lost. Banks can overcome the challenge presented by Fintech through various solutions. One solution could be by joining hands with Fintech companies, this could combine the innovative use of technology by Fintech and the expertise of banks, because as Tommy mentions, Fintech still need improvement, this solution would leaves customers truly satisfied. Alternatively, banks need to make use of technology the way Fintech does. One piece of technology which could be used is robo-advising, which relies on algorithms to make asset recommendations. Therefore, allowing for banks to use sophisticated technology to provide services to customers which reflect modern solutions. Such modernisation could allow banks to break away from their ‘old-fashioned’ and outdated image.
Banks can de-mystify themselves through social media. Huge organisations such as Amazon use social media, such as twitter, as a means of easily accessible and simple help for their customers. Aside from the benefit of convenience, answers to the queries that customers have can be broadcasted to hundreds of thousands of people, enabling Amazon to spread useful information rapidly to a large audience. Although some banks do use social media, usage is quite restricted, limited to marketing events. In order to successfully make use of online platforms, banks need to increase their scope in order to reach a variety of people.
Sectors such as marketing use data statistical analysis in order to tailor their products to a specific audience. Such technology would also benefit banks, currently banks send out too many emails which are not tailored to specific customers and therefore are ignored. By using data analysis of different social groups, banks could market specific deals or benefits to customers who are more likely to use them, therefore making their advertisements more effective. Currently, social groups are treated like generic categories, for example advertising student card to people over 18, even though only half of this age group attend university, leaving the other half as a lost opportunity. Marketing therefore needs to be more sophisticated, and data analysis could help with this.
Another challenge which face banks is that they don’t provide a personalised experience. For example, I get emails, text messages and letters from my banks (which I don’t read), this information overload stunts decision making, so banks are ineffective in reaching out to their customers. Personalised banking can be achieved from learning about customers’ preferences through means such as a online surveys, e.g. asking customers their preferred method of contact, which services they would prefer in person, and which services they prefer online, to name a few examples. Using digital technology, banks can tailor experiences to individuals, matching to standards set in other sectors.
With the popularisation of apps to manage everyday life, banks need to branch out to customers with apps which can manage different aspects of their finance. Currently, with banking apps you can look at your spending, send some money and that’s about it. Apps such as Yolt offer customers a way to manage their finances effectively by categorising their spending and tailoring the experience to them. In order to stay relevant and become more user-friendly, banks should also develop apps which allow customers to do more than just look at their spending.
Banks can revolutionise their current strategies and methods using technology, offering an improved experience to customers and transforming the áfinancial market. In order to stay relevant within today’s digitalised society, banks need to take measures in order to improve themselves as other sectors have done, as well to keep up with new and growing financial industries which have gained momentum using technology, therefore creating a new wave of experiences for people. People now expect these experiences from their own banks, which need to be delivered.
