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Key digital banking trends that define financial future

Maryna Cherednychenko - January 31, 2020 - 0 comments

If you think it’s hard to surprise you, 2020 will convince otherwise. Digitization is no longer a neology. Yet, it is not omnipresent. HiTech explores new spheres to displace offline activities. In the coming year, the banking sector stands at the core of digital expansion. Roomy offices and comfy chairs are taking a back seat. Banks head for comprehensive automation that utilizes emerging technologies. What is digital banking course and what to expect? Let’s see.

Mobile banking becomes smarter

Mobile banking is a must-have in this season and at least three previous. Today’s pace of life is too fast to pay at the desk. People want to access bank accounts and balances in one click. Modern banking apps offer a wide range of services:

  • 24/7 access to bank accounts
  • Balance, history, transactions review
  • Bill payments
  • Money transfers
  • Online loans and deposits
  • Security warnings

In 2020, mobile banking trends show advanced ambitions. The app gets more educated. It learns to synchronize with other user devices and quickly respond to fraudulent transactions. For example, it may alert the user in case card payment is detected far from the location of the user’s smartwatch or phone. Also, it may suggest distinct services based on customer decisions and current location. For example, to buy or sell stock at the airport or view stock report at home.

Mobile banking technology trends

Mobile banking technology trends

Bank leases its infrastructure

In 2020, banks are obliged to rearrange their activities following the Revised Payment Service Directive. A revolutionary change documented in PSD2 is the emergence of open banking API. It gives free access to users’ bank accounts (with the consent of users) to third-party organizations which are not banks.

Open API completely changes the position of banks in the financial market. They no longer act as monopolists of user data but turn into service providers. Banks sell their “data as a service” and charge a fee for connecting to the bank’s interfaces. Among others, banks publish information associated with accounts, payments, and payment cards. They open portals for developers to make all banking solutions immediately available.

Banking as a Service

Banking as a Service

FinTech undertakes banking duties

Current digital transformation in banking creates fertile ground for the development of small and large fintech companies. People increasingly use the services of non-banking organizations to manage their finances. Given this, FinTech startups do extremely well in filling specific market niches. In mobile app stores, you can find FinTech apps that do the following:

  • analyze cash flow
  • aggregate banking services
  • do accounting
  • manage taxes
  • invest savings

The giants of the HiTech industry don’t trail far behind. Just recently Apple has introduced its “beautifully clear” credit card. Apple encourages using its creation by promising tempting cashback for purchases of Apple products and paying with Apple Pay.

Google also keeps an eye on digital finances. In 2020, we are to meet Google checking accounts in collaboration with Citigroup. Google will act as an intermediary between the bank and the client, providing the latter with a super convenient interface for financial management.

Amazon e-wallet for payment processing, Uber Money for cash distribution, the list goes on and on. The due year carries financial services that fit every taste.

Growth of FinTech services

Growth of FinTech services

Blockchain removes financial intermediaries

Blockchain technology is known as the mechanism underlying cryptocurrency transactions. However, blockchain has much wider use. Among others, it is successfully applied in financial operations and trading. 

Blockchain excludes the participation of a middleman in a deal. It means you can transfer money, sell goods and services without involving a bank. Blockchain-based remittance lets both the sender and the recipient know exactly where and when the money is. Such operations are faster, safer, and increasingly lucrative compared to traditional transactions.

Blockchain-based remittance

Money transfer without participation of bank

In 2020, blockchain relegates banks to the background but still contributes to digitization in banking. The technology is expected to cover more operations. A lot of financial giants hold a course for transformation. For example, Deutsche Bank is developing an investment system using blockchain technology, HSBC is launching blockchain to replace paperwork to track customer assets of $20 billion, UBC is conducting full-scale transactions at the blockchain-based platform

AI replaces humans

Business owners know that chatbots are very beneficial. The tireless employees work round the clock and do not need a monthly pay. In 2020, robots become more intelligent, flexible and client-oriented. They perform more complex operations and learn human habits.

Robotic process automation is present in multiple areas of the digital banking ecosystem. It takes part in payment reconciliation, order processing, report generation, and other activities.

Providing 24/7 customer support, chatbots give hyper-personalized recommendations based on banking data and mobile usage patterns. Except for answering the user’s questions, they offer services that may be interesting to clients.

AI plays not the last role in security matters. In particular, it is at the heart of Liveness technology that defines whether the system interacts with a physical human being and not an inanimate substitute. Robotization penetrates every side of banking. That is why many financial institutions invest in machine learning platforms and reduce the number of options performed by people.

AI in different banking spheres

AI in different banking spheres

Big Data becomes a source of income

Banks generate and receive tons of data in the course of their activities. Personal user accounts are only a small piece of what they know. Digital transformation in banking empowers financial organizations to predict the business behavior of clients, learn purchase preferences, and build the spending patterns. With the help of AI technologies, banks sort data into valuable and irrelevant. Special analytical tools compose long-term and short-term forecasts for building a winning financial strategy.

In 2020, big data will be used for smarter in-depth analytics. The main use cases in the due year are:

  • personified custom experience
  • financial market segmentation
  • competent management
  • productivity gains
  • targeted marketing
  • improved cybersecurity

The banks will also use big data as another source of revenue. They will sell their holdings to third party organizations that provide commercial services. Data monetization is expected to be one of the foremost digital banking trends 2020.

AI in different banking spheres

AI in different banking spheres

Future of banking transformation

In 2020, mobile banking turns to personal assistant, FinTech performs banking functions, and banks sell their environment. Digitalization becomes global. Regular bank branches gradually fade. Clients appreciate quicker, polished service, so they easily change the servicing bank or choose third-party service without leaving their phone.

Banks that do not manage to follow new trends run the risk of being left overboard. To keep up with times, they hire AI for better user experience and improved security, implement smart analytics for an additional source of revenue, and provide blockchain technology for hi-tech operations.

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