As the pandemic outbreak triggered many changes across the world, the banking and financial institutions globally were also forced to reassess their traditional ways, strategies, and business models. Now, as we enter 2021 with new hopes for a better and safer tomorrow, it is becoming obvious that technology will have an even bigger role to play in helping financial institutions adjust to the changes caused by the pandemic. Let’s take a look at the top banking and Fintech trends that are predicted to dominate 2021.
Digitization Driven by Financial data APIs
Financial Data APIs will be at the heart of banking and Fintech trends in 2021. As per a report, the global API management market size is expected to grow to $6.2 billion from $3.02 billion by the end of 2024. In the post-pandemic world, as the customers increasingly exist online, the banking and finance institutions have to create customer-centric digital experiences. To achieve this goal, banks need to partner with tech companies that use banks’ API to host the desired financial product within their application. For example, Google recently announced the expansion of their banking partnership network, where they leverage banks’ customer networks and licenses to offer its Google Pay customers savings accounts and other digital services.
Information security powered by Blockchain Technology
The growing popularity of digitization in the banking and finance sector means an increased exchange of sensitive and critical data. This exchange of data usually occurs either through the bank’s backend system or via third-parties. Blockchain technology is emerging as a critical enabler of safe and secure transactions in the increasingly digital world. In a survey conducted on banking representatives, 48% of people think that Blockchain technology will be a game-changer for the banking and finance sector in 2021 and beyond. Here’s how the banking and financial institutions will be transformed by cutting-edge technology:
- Blockchain ensures end-to-end encryption of the stored information.
- Customer data can be verified at multiple touchpoints using this technology.
- Cross-border payments can be ensured with this technology.
- It enables monetary interactions to take place in a decentralized manner.
AI to gain even more importance
As the banking and finance sector continues to digitize its operations and strives to make the customer experience seamless, artificial intelligence (AI) will be the key to achieving success. From reaching out to the bank’s support services to filling out lengthy forms, AI can make the work a lot easier. In 2021, Artificial Intelligence will be used across the spectrum of banking and financial services to stay ahead of the competition, improve their processes, and provide smoother customer service to customers. Here’s how:
- AI’s increased potential for spotting anomalies and real-time sensing enables it to detect fraudulent activities faster and better.
- AI-powered finance management tools allow banks to use the large histories of data to make much better decisions across various processes, including back-office operations and deliver tailored experiences to their customers.
- AI-powered virtual assistants can anticipate and answer multiple customer queries at a time and help them perform banking transactions in real-time. Today, an increasing number of banks depend on bots for enhanced customer service.
Voice-based technology to transform the banking experience
The integration of voice-based technology can provide a futuristic edge to the traditional banking experience. For example, banks can use voice recognition technology to provide a remote and secure form of biometric authentication to their customers that allows them to safely conduct all the transactions from the comforts of their homes. This technology can also be leveraged to provide a number of voice-activated services to their customers, like- checking account balance, interacting with a digital banking assistant, etc.
Payment companies, such as PayPal and banks, such as the Royal Bank of Canada, are already allowing the customers to make payments through conversations with Siri.
Internet of Things (IoT) for better data-driven insights
Financial institutions have been making large investments in IoT to improve their internal infrastructure and customer services. With the help of IoT, massive stockpiles of customer data can be collected, which can be used in the following ways:
- To improve operational efficiency.
- Prevent fraudulent transactions.
- Reduce Non-performing assets.
- Easier customer verification.
- Improving employee and customer efficiency.
- Loan Tracking.
- Customer retention.
Technology is the present and future
By looking at the technology trends described, it can be said that 2021 and the coming years are going to see a renewed focus on automation and the emergence of connected banking. With banking becoming more agile and an increased need to access data anytime, anywhere, it’s time for the banking and financial institutions to accelerate their digitization and leverage the latest Fintech trends to stay relevant, competitive, and future-ready.
(Also read: Three technologies that can permanently change the banking sector.)