How Technology is Transforming Banking for Banks & Customers Alike
Digitalization is changing different elements of people’s lives, especially what they want from businesses and how they interact. While most business industries are undergoing changes and embracing digital transformation, the financial sector is the one that is experiencing the most significant changes.
Banking through history
The truth is that the banking industry wasn’t the one looking for a change throughout history, as the customers and banks were happy with the way things were operating. From the moment the banking industry developed and the first banks were starting to open, people were thrilled they had somewhere to store their money and keep it safe.
Banca Monte Dei Paschi di Siena, one of the first banks in the world, opened in 1472, and it still exists, celebrating its 550th birthday this year. For the bigger part of those 550 years, customers only required a place to store their money, keep it safe, be able to deposit or withdraw when needed and request a loan. This is why compared to the other industries, it hasn’t undergone any extreme changes until the last few decades.
Technology is changing our world, and while other industries continuously embraced the changes, banking was a little bit slower in accepting them. But it is impossible to stay inert in the face of changes.
The last 20 years have managed to transform the sector more than all previous years combined. From online and mobile banking to neobanks and cryptocurrency, technology has changed every aspect of the banking industry; we look forward to discovering what will happen next.
What can technology offer to banks and their customers?
We are all aware that technology is leading banking toward a more digitized future, but what will that mean for banks and their customers? The banks are not the only ones caught in the middle of digital transformation driving the changes; customers also want to have their say.
Technology enhances all different aspects of customers’ lives, making it faster, more convenient, and more accessible. They want the same with financial services. Nobody wants access to their account and their money to be restricted by bank working hours or by even the long lines; they want it immediately without going through unnecessary hassle. Technology can give that to them.
Let’s take a closer look at all the ways technology is transforming the banking industry and what it will mean for customers and banks.
More choices than ever
In the past, people didn’t have a lot of choices when it came to choosing their banking institutions. You were stuck with a bank that had a physical branch in your city or close by, which left a large number of the population unbanked or underbanked.
While some didn’t have any access to the bank, as is often the case with underdeveloped countries, others didn’t have the resources to use all the financial services they could’ve benefited from. According to the Borgen Project, the unbanked population in the UK misses out on up to £500 in savings annually since they miss out on benefits such as discounts when paying with direct debit.
At the same time, digital transformation allowed banks to expand their services to usually more unreachable locations and to reach new potential customers.
Banks always had to deal with malicious actors trying to breach their security and steal money. While in the past that meant actual break-in into the physical branch or scamming the employees, now the risks include online dangers.
Technology has allowed banks to implement new and advanced cybersecurity software like Manage Engine & strategies that can successfully identify and prevent fraud attempts before they can do any damage.
For example, by introducing kyc banking, financial institutions can stay compliant with government regulations while at the same time ensuring their customers are who they claim to be, reducing the risk of fraudulent activities. This allowed customers to have peace of mind when banking.
The convenience of remote banking
Customers are no longer limited by the way they bank. While in the past, they could only conduct their financial affairs when visiting the physical branch, that is no longer the case.
There are more options than ever when it comes to banking – from online and mobile to even by telephone. With the emergence of remote banking, customers can conduct all their financial business when they want it and where they want it without waiting for the bank to open or deal with lines.
The only question that remains is will the physical branches survive this revolution?
Around 60 bank branches are closing each month in the UK, which doesn’t paint a pretty picture for their future. To ensure their survival, banks need to transform them so they can provide the same level of convenience as remote banking.
Technology is Transforming Banking: Personalization
Customers no longer want generic service; they want banking to be personalized to them and their unique circumstances. The development of technology and artificial intelligence allows the banking industry to gain more information about their customers and use it to personalize their experience.
From using customer names instead of generic Sir/Madam in the email to knowing their preferred method of communication, this can make a significant difference in customer retention and satisfaction.
AI and chatbots are changing the future of banking and how customers communicate with them. Customers expect to receive fast responses to any inquiry they have, and waiting on the phone for hours to speak with someone is no longer acceptable.
Chatbots can provide all the answers customers need in real-time while freeing up bank employees to concentrate on other aspects of their work.
Technology is Transforming Banking: Conclusion
The digital revolution has introduced a wave of technological developments that can significantly influence our lives when implemented correctly. Every industry is finding ways to embrace and transform its business operations to continue thriving in this new digital world.
Banking is no different. By embracing the latest technological developments and the transformation they bring, banks can ensure customer retention and satisfaction while staying competitive in the busy digital world.