As one of the oldest businesses, the banking sector has been evolving at a fast pace ever since the 18th century. However, it takes its origins far from ancient Babylon. The modern banks, as we found them today, has emerged in medieval Italy, in 1472. It’s the Monte Dei Paschi di Siena that still exists.
Modern banking was always perceived as a long queue place with enormous paperwork to do. But not anymore. With the arrival of digital, we are witnessing tremendous technological advances in the banking sector. Blockchain technology, paired with big data and artificial intelligence are part of significant transformations in the banking sector.
Many are the strong points of technological influence on banking: your account is at your fingertips, minimum system errors, better data protection, better customer experience, timesaving operations, lower fees for international money transfers.
Check out the major tech innovations and their benefits for the modern banking sector.
Banking Sector and Technology: Big Data
We can clearly see that the banking sector no longer has a choice: it must again show an interest in the many technological innovative solutions and above all exploit them for its benefit before others do it in its place.
Big Data corresponds to the enormous volume of data that companies own or acquire in their activities.
In the era we are living, data is at the heart of all concerns. It is a precious asset and the use of which can yield huge returns if you figure out how to acquire it, process it, and analyze it.
Banks have an astronomical amount of data on their customers: data that has sometimes been collected for decades! Banks know how much money their clients are spending, what their spending habits are. They see changes in lifestyle, divorces, deaths, births. They might find business associates that are willing to pay a great deal for this kind of information.
Digital banks must go by-law when it comes to data protection. It is, therefore, a major challenge that presents many opportunities but also many risks.
Cybersecurity and Data Protection
Banking sector breaches can be enormously expensive. That’s the way a robust defense is set to prevent this kind of event. In 2015, there were approximately 400 data breaches happened in the United States, 10 percent of which were in the banking sector. That was 85% more than the previous year. Keeping the client’s personal data out of harm’s way is of utmost importance. It is the biggest investment area for banks to ensure respect for private life and compatibility with personal data use.
Banking and Blockchain Technology
The blockchain technology, from its creation in 2009 by Satoshi Nakamoto, aroused enormous interest from banking institutions. So far, many banks have found a way to implement and get out most blockchain applications.
At the same time, many startups aim to find solutions based on this amazing innovation, enabling certain operations to be managed automatically, at a lower cost, and offering more security. Blockchain integrated to the bank is no longer just a futuristic projection from science fiction movies!
Artificial Intelligence in the Banking Sector
2016 represents the victory of AlphaGo, the Artificial Intelligence program launched by one of Google’s subsidiaries, over one of the best Go players on the planet, when all the experts thought it wouldn’t happen for at least twenty years. This victory, therefore, constitutes a new stage in the development of AI.
We are just at the very beginning of the artificial intelligence wave, which is developing at a supersonic speed.
We should see a growth in the number of AI personal assistants in the banking sector, able to interact with us, discuss with us in human alike language. And also able to finally perform more sophisticated tasks such as offer us savings products, bank transfers, or why not – take out a mortgage.
The development of digital technology constitutes an opportunity for the further deployment of the banking sector. It means reinvention and improvement of customer relations by allowing more flexibility, access to a plethora of more secured, modern, and instantly available services.
If they organize their business wisely, invest in the right innovations and tech tools, and finally get around the right teams to deploy these tools, banks will be at the forefront of the ongoing digital transformation.
According to recent reports, 96% of banking professionals believe mobile app technology will impact their industry, but only 15% have started their own deployments. Nevertheless, the majority of them plan to deploy within the next three to five years. As part of an integrated strategy, banks need to consider the use of new digital channels.
They must switch to second-generation digital banking: digital should not be limited to a support role, it must become the first sales and communication channel for banks. Rethinking the processes around the customer is not easy. Still, it remains the factor of competitiveness, which is why banks must go hand-in-hand with leading-edge digital technologies that apply to their industry.