Technology has been a major disruptor in the way banking was done just a few years ago. While the pandemic accelerated the adoption of technology across industries and sectors, our dependence on these advancements has been magnified to a great extent. For example, the recent Annual Report 2020-21 of Reserve Bank of India shows, the total digital transaction volume in 2020-21 stood at 4,371 crores, as against 3,412 crores in 2019-20, attesting to the resilience of the digital payment system in the face of the pandemic.
As these technological advancements continue to disrupt the traditional ways of banking, we see a whole new spectrum of newer and faster banking solutions. Online deposits, mobile wallets, e-bill payments, and so on have fundamentally become a norm for how financial transactions are carried out nowadays. With increased consumer demand for digital banking services, artificial intelligence is also at the core of digital banking transformation. These advancements are predominantly followed by the growth of fintech and neo-banks that are making the entire banking process more convenient and hassle-free for customers.
Following are some tech trends that have defined India’s banking system this year:
Open banking is an important strategy for financial institutions to compete and grow. Banks embed their financial solutions into third-party software and create a single interface for customers to access the services of their bank. By partnering with fintech, banks make their services available to their customers across apps for easy payments. Online payments while ordering food from Zomato or digital payments in Uber are possible due to open banking services.
To undertake risk management practices, banks are increasingly using blockchain technology that makes it difficult for hackers to extract confidential information such as customer bank details. The industry is already experimenting with the technology by replicating current asset transactions on the blockchain. It helps in improving efficiency, enhancing security, and making quicker transactions with decreased costs.
As consumer reliance on cash is decreasing, companies such as WhatsApp, Google, Amazon are coming up with their payment systems. Biometric payments are shaping the way consumers make payments through their mobile devices. Payments are made within seconds of scanning their finger or facial recognition technology.
Most banks have started to move towards cloud-based banking. The cloud allows banks to synchronise the enterprise; break down operational and data silos across customer support, finance, risk, and more. This transforms their cost-efficiency and enables them to provide digital experiences to customers by keeping their legacy model intact.
Artificial Intelligence and Machine Learning
Banks are extensively implementing AI and ML to offer just-in-time, personalised services to their customers. AI and ML automate the banking processes and facilitate better customer services, credit and loan services. They also combat fraud.
As voice-based interactions are becoming more popular with consumers, banks will start offering an increasingly large number of services on a voice interface. Financial chatbots are saving over four minutes per transaction. It will also allow banks to receive customer feedback easily and economically.
‘Zero Trust’ Security Model
Conventional IT models are getting outdated, making banks prone to cyber fraud. A new approach to combat this threat is the Zero Trust Security model. It is a security framework that secures the enterprise by removing implicit trust and enforcing strict user and device authentication throughout the network.
As more technologies come into play, existing technologies adapt to create more interactive consumer experiences. Wearable devices such as smartwatches are expected to transform the digital payments experience for customers. Gaining popularity among millennials and GenZ for wearable payment devices is going to revolutionise the payments space.
The year has seen increased dependence on digital technologies for banking needs. There still lies a massive potential for banks to fill the gaps to meet their customer expectations. More businesses are digitising their processes and finding more agile ways of working and modernising functions by investing in the latest technologies. Modern banking technologies are helping banks collaborate and integrate their services with fintech and neo-banks to offer consumers newer and efficient technologies.
Consumers are also actively adopting these new technologies for better and convenient banking experiences. As a result, more and more consumers are transacting with their banks, building an opportunity for newer technologies to be created in the space, providing the customers with an ultimate banking experience.
The writer is CEO and Co-founder of Zeta.