Digitalization is transforming how humans communicate and conduct business daily, and advances in banking technology are influencing the future of the financial sector all around the world. The banking industry is transforming Millennials and Gen Zers’ increased demand for a digital banking experience. Technology has a hand in nearly every element of the banking sector, from consumer and mobile banking to neobank startups. Its influence will continue to propel finances into a virtualized future. Consumer banking refers to particular services banks will provide to consumers, such as checking and savings accounts, credit and atm cards, and loans. Consumers’ increasing demand to obtain financial services through digital channels has spawned a new e-banking wave reshaping the retail banking industry.
Consumer Banking
Innovation aimed at increasing the operational efficiency of retail banks is having a favorable impact on the market. As per Insider Intelligence, 39 percent of retail banking executives believe technology has the most significant effect on lowering expenses. At the same time, only 24percent think it has the most impact on improving customer experience. As a result, retail banks are establishing systems in the Banking-as-a-Service (BaaS) area to stay competitive. For example, UK neobank Starling just used to offer B2C retail banking services. However, after dimproving a BaaS platform, Starling diversified its product and revenue sources, allowing it to stay relevant in the neobank industry.
However, m – banking has cemented its position as a must-have tool for financial institutions looking to stay competitive, particularly among technologically savvy millennials and Gen Zers. Indeed, according to Insider Intelligence’s fourth annual Mobile Banking Competitive Edge Study, mobile is one of the top three factors influencing their choice of FI for more than 45 percent of respondents.
Mobile Banking (M-Banking)
Internet banking has become the preferred method for customers to make deposits, account transactions, and track their spending and earnings, as well as a critical differentiation for banking companies. Almost 80% of our people polled who have used m – banking claim it as their primary method of accessing their bank account.
Mobile capabilities are now a more important feature in bank selection among participants than last year because of the coronavirus outbreak. Financial institutions should learn which mobile banking elements consumers appreciate the most and where they stand in comparison to their competitors so that they may focus their efforts on specific areas. Consumers’ primary concern when it comes to mobile banking is security. The threat of a data breach raises demand for services that keep customers’ data secure–allowing customers to place holds on to their bank cards, set travel alerts, and submit and review card payment disputes are just a few examples of successful safety banking features.
Internet banking, which encompasses m – banking, refers to the complete digital banking experience, including mobile applications, computers, interactive chatbots, etc.
Online Banking (E-Banking)
Mobile banking has surpassed online banking in popularity, while the aggregate amount of internet customers has decreased globally. According to Insider Intelligence, mobile banking is expanding five times faster than e-banking, and half of all online users now use mobile banking. Despite the growing popularity, several banks are still unable to fulfill the needs for mobile tasks such as bill payment and incentive claimings, forcing them to redirect consumers to online banking. As younger generations and Gen Xers continue to gravitate toward the mobile market, this drive will not be enough to mainstream online banking.
Neobanks, or digital-only banks, are altering the destiny of banking worldwide. Despite a delayed start in the United States because of high regulatory obstacles, current developments and regulatory easing indicate that US neobanks are poised to take off.
Digital-only Banks (Branchless Banking)
Modern mobile banking technologies are a key reason driving the meteoric expansion of US neobanks, and their importance has grown in the aftermath of COVID-19. To effectively scale their operations, conventional banking firms, neobanks, and digital companies may benefit from knowing how successful neobanks are, increasing the bar for client expectations and trust. For example, chime, the biggest US neobank, is situated in San Francisco and has approximately 7.4 million account users as of 2019, with a projected growth of 19.8 million by 2024. Establishing many more neobanks inside the United States will raise awareness of digital-only banking, eventually displacing traditional financial institutions.
Bottom-line – Trends
Consumers, particularly Gen Zers, who perceive technology as something which improves their lives, are driving the destiny of banking technology. The use of an application programming interface (API) to make private data available to anyone with the consumer’s permission is a frequent trend in banking technology. Can use APIs to make it possible for a bank’s smartphone app to retrieve client bank details. Fintechs have also embraced API technology to power their businesses, and their success has prompted competitors to create their APIs. Furthermore, according to a 2020 Insider Intelligence poll of banking executives, 66% predict that new technologies such as blockchain, artificial intelligence (AI), and the Internet of Things (IoT) will have the most significant impact on banking by 2025. According to Insider Intelligence, banks are investigating blockchain technology intending to streamline operations and lower costs. Consumers may even see AI deployed by most banks at the front office via chatbots. Banks embrace artificial intelligence to improve client identification and verification while also simulating actual staff with chatbots and virtual assistants.
