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The Banking Industry and their Challenges to Approach the Digital Roadmap

The banking industry is facing continuous changes nowadays. At a time when financial industry analysts are seriously debating if Amazon will get into banking, the banking market is in a state of flux when it comes to technology. The bank industry hasn’t got stuck when it comes to new technologies but, every day the evolution is quicker and heavier, what evolves into a continuous out of date technologies. Mobile banking is nothing new, but it is now a “table stakes” experience, especially for younger bank customers, meaning it is a must-have for all banks. According to industry experts and analysts, if a bank does not have a solid mobile app, they are an also-ran. Chris George, senior vice president of client strategy at NYMBUS, a core banking modernization company, states that “The big decision-makers are really leaning on the idea of, ‘Mobile technology is taking over and there is a digital-first movement that is taking hold in the marketplace’”. There are five key banking technology trends that the industry will start facing in 2018.

Banks have made use of application programming interfaces for years, but APIs will increasingly be used to enable new services. As The Financial Brand notes, APIs “provide the gateway for innovative, contextual solutions that would be difficult to offer without open banking.”

By the end of 2018, 50 percent of global Tier 1 and Tier 2 banks will offer at least five external APIs. Banks are increasingly partnering with financial technology companies via open APIs. Part of that will be driven by regulatory requirements.

Mobile banking is no longer novel, but will become easier to use and provide more functionality for customers.

Mobile banking will continue to accelerate past standard banking in customer preference as their digital, user and customer experiences become more enriched and data-informed. This will include consumer-to-business frictionless digital banking, consumer-to-consumer one-click payments, new cryptocurrency opportunities, password-free biometrics, locational services and offers, and conversational interfaces.

“Come up with apps and an online presence that competes with the ease of use that those other players have come up with. It’s no longer acceptable to have a mediocre app.”

—Chris George, senior vice president of client strategy at NYMBUS

Artificial intelligence will help banks automate processes and improve the customer experience. There are organizations beginning to greatly simplify processes through intelligent automation, which in turn helps to expose enterprise data that has been traditionally trapped in complex core systems. There will always be a need for a human and that there will be not totally AI-driven banking systems coming online anytime soon. However, AI can help automate repetitive processes and potentially improve customer service via chatbots.

Robots are 50 to 90 percent less costly than offshore or onshore employees, and that banks will increasingly invest in AI to become more efficient while still maintaining strong customer service. There is a growing demand to maintain lean operations while delivering exceptional customer experience at lower costs. Over the next two or three years, banks will add AI capabilities to their apps.

Security is always a concern for banks and will continue to be in 2018. Banks will increasingly seek ways to add new layers of security to their services. IDC predicts that in 2018, spending will rise by 20 percent on next-generation security-based authentication methods, as banks strive to build “digital trust” with their customers.

Customers have become more comfortable authenticating payments on their smartphones via thumbprints. Banks will extend that to facial recognition and voice prints. As customers become overwhelmed with trying to remember numerous passwords, biometric authentication methods will help simplify security processes and provide more secure methods of authentication.

“Anything that can further prove I am who I say I am and is as easy as using voice, thumbprints or a facial scan, banks will start embracing that”

—Marc DeCastro, Research Director for IDC Financial Insights

Banks have been dabbling with the Internet of Things and will continue to do so in 2018. There will be more proof-of-concept deployments next year, as banks pick a few high-traffic branch locations to test IoT technologies. Banks need to see how customers will react to sensors in branches.

For example, a customer could walk into a branch and a bank could use beacons or sensors to authenticate a customer via their biometrics. That could then send a signal to an ATM to pre-stage a cash withdrawal based on the customer’s preferences. As soon as the customer inputs their PIN number, the money would be dispensed. Such a frictionless transaction could give customers a “wow” factor and make them think highly of IoT. ATM manufacturers are embedding these capabilities.

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Zigurat Global Institute of Technology