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Future Trends in Digital Banking You Need to Know
So, let’s take a look at the future trends in digital banking you need to know about in 2024.
1. Blockchain and Cryptocurrency
Firstly, there is the integration of blockchain technology into banking. More and more banks look for ways to introduce it into their systems due to the high level of security that it may provide for transactions.
Currently, blockchain is integrated into various processes, including:
- Accounting and auditing – Here, blockchain technology provides a secure and easily accessible way for bookkeeping.
- Loans – There are a plethora of ways how blockchain is utilized in this case, but syndicated loans deserve special attention. These, often given by groups of banks, are often problematic, especially in terms of KYC compliance. Through the use of blockchain, it is possible for the client to complete verification just at one of these banks, which can share the information with other institutions, making the process simpler and faster.
Apart from blockchain technology, banks have also started to integrate cryptocurrency custody services,
2. Artificial Intelligence
The role of AI in digital banking is ever-growing, and it is the direction in which the whole sector is heading. Artificial intelligence algorithms, like blockchain, can be executed for numerous reasons and to improve several areas in a bank, from the front, through the middle up to the back office. The digital banking advancements utilizing AI include:
- GenAI chatbots and assistants – Virtual assistants in banking customer support are the most common use case of AI in this sector. They enable agents to deal with customers more efficiently and are a step toward the aim of many financial institutions: resolving queries at first contact.
- Security and fraud detection – AI, combined with deep learning, is also being utilized to boost digital security in online banking, e.g., spot indicators of fraudulent activities, helping banks stay compliant with the AML. This can also be applied to the KYC procedures, as AI may be introduced to estimate the risk (though remember that current regulations around the world frequently forbid making financial-related decisions based purely on input from artificial intelligence).
- Personalization – Another way how banks leverage AI is to provide more personalized customer support and sales offers. Artificial intelligence is capable of analyzing the data of a given customer and providing agents with insights and product recommendations that are more accurate than ever before.
- Automation – AI is also introduced to reduce the number of repetitive tasks performed by bank employees, improving productivity and making them focus on more value-adding activities.
- Data integration – With omnichannel support in digital banking, the role of integrated databases and removing data silos rises. AI is also used for this purpose, namely to integrate the data into one unified platform, from which every bank employee can access the information they need, even if a different team collected those.
3. Open Banking
We cannot discuss digital banking trends without mentioning the concept of open banking – using APIs to share financial data and services with third parties.
Open banking is being applied to an increased number of services, such as accounting or mortgage loans. Embracing this approach lets banks speed up processes and make them more convenient for the clients, which is crucial considering the role that customer experience currently plays in the world of banking.
4. Sustainability
Banks are like any other businesses – large brands that need to attract new customers. But for that, financial institutions need to adapt to the expectations of these new clients.
The digital banking trend to pursue sustainability has its roots in data. According to Cornerstone Advisors [1], consumers, especially from the younger generation, expect banks to implement sustainable solutions, such as a carbon footprint tracker, demanded by 73% of Gen Z US adults, 69% of Millenials, and even 57% of Gen X clients.
This results in banks shifting toward a more eco-friendly operational model. However, it does not end here. Initiatives that educate consumers about sustainability or even incentivize sustainable practices are also appreciated.
How to make your financial institution more sustainable? Here you have a lot of options. You need to think outside the box and approach each area separately. For instance, introducing our Livebank24 platform and app to your wealth management services will help you reduce your carbon footprint due to the advisors traveling less and communicating with the clients via chat, but reducing the impact of your digital contact centers might require a different approach – you need to find all the possible solutions and implement them.
Digital Banking Advancements: Conclusions
The current and future trends in digital banking could be summed up as improving customer experience, security, and sustainability. After all, these are all the end results of the shifts currently taking place in financial institutions. We must bear it in mind, as with new technological advancements, the particular digital banking trends might change, yet the goals of the banks will always be the same, but there will be different means utilized to achieve them.
You may also read: Unlocking the Future of Banking: Insights from the FTB and Ailleron Technological Breakfast
Sources:
[1] https://www.insiderintelligence.com/content/spotlight-sustainable-banking
