Future of Banking

The Future of Banking
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Key report findings

This is true not only with regard to cities but also with regard to rural population. Technology has drastically improved the operational efficiency of the banking industry. This has made it possible for more individuals to open and operate bank accounts much more easily and has led to the growth of the banking sector in India. Digitization has lowered operating costs and increased the profitability of the banks.

This in turn has made it possible for banks to offer a higher rate of interest, which attracts customers.

The future of banking

The socio-economic trends we see in India today only indicate a steady growth of the banking sector in India. This growth will also be the fuel for further development of banking technology, thus brightening the future of Indian banking sector. Like any other industry, computerization and new technology is very rapidly changing the face of banking.

Or perhaps it can be said that in recent times the entire concept of banking has undergone a change, and it is not over yet. Consider some recent developments in banking sector:. The Negotiable Instruments Act has undergone a number of amendments and now includes the provision of truncated cheques and e-cheque instruments. Soon we can expect e-cheques to replace paper cheques in the banking process. India has introduced a number of options to make fund transfers easy.

Banks have started providing a number of services over the telephone. Chatbots are used for a number of queries and phone banking executives handle the rest of the queries. A number of banks have developed applications providing different banking services. We can expect to have more services provided through these applications and we will see the user interface becoming more user friendly. A number of digital wallets are also now available. PayPal, PayTM, MobiKwik, PhonePe, and other such e-wallets are becoming increasingly common, especially as the government is encouraging cashless transactions.

ATMs are perhaps the most widely used aspect of digital banking. Today however, ATMs not only allow a person to withdraw cash at any time of the day, but also allow an individual to pay their utility bills, and even transfer funds between accounts, besides offering other services. The future of Indian banking sector is tied in with the future of banking technology. Data science can be used to predict the needs of customers and provide them with customized products that suit their needs. With AI making inroads in digital banking in India , there will be changes to banking processes. We can expect to see smarter operations as backend processes are streamlined.

Digital banking will help customize the screens for customers based on their usage history. It will also allow for automatically filling in certain information required on online forms. This will ensure a much better user experience. While passwords and OTPs are already in use, we can look forward to advanced biometric authentication, voice recognition and face recognition in the near future. ATMs will become contactless, and the mobile phone would be used to operate it.

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More and more banks will adopt blockchain technology which means that the account details of a customer will be maintained in real-time across banks while eliminating the risk of hacking by criminals. Financial transactions become encrypted packets called blocks and get added to an encrypted chain, much like an email chain. Banking in India is at the crossroads now. They are under intense pressure to accept and evolve with digitization.

Leading industry experts include:

Powerful forces are reshaping the banking industry, creating an imperative for change. Looking to the future of banking, digital is no longer an option for firms who wish to survive - it is a must. What is the Future Banking Forum ? Commonly thought of as mobile banking or online banking, digital banking is one of the most misunderstood concepts in the financial world today according to Stanley Epstein, Director of and co-founder of Citadel Advantage — an international financial services consultancy. On the other, the techno-optimists believe they will significantly enhance productivity and stimulate growth. Latest White Papers Biometric physical access control in data centres: Ensuring regulatory compliance, with indisputable audit trails EMKA UK Ltd Describes the compliance environment and how the installation of biometric technology at the cabinet can assist in meeting the security requirements of data Transaction Monitoring ABC Electronics requests to send multiple international wire payments to various beneficiaries.

Their very existence is at stake. They need to adopt a holistic approach to digitization. It is not just a customer relation tool, neither is it just something that speeds up a banking process. It is changing the entire concept of banking. Product innovation and development according to the needs of individual customers is the current buzzword.

The agility that banks in India have displayed during the past couple of decades demonstrates that they will continue to evolve. The Indian banking sector will continue to grow, and digitization will continue. So although an online deposit strategy will help banks maintain deposit market share, it will also likely result in lower margins, all else equal. Within the payment space, consumers continue to mostly initiate electronic payments with bank-issued credit and debit cards, sending funds mainly through the open-loop networks of Visa and Mastercard or the smaller closed-loop networks of American Express and Discover.

Banks collect fees from merchants when consumers use the cards they issue. The ubiquity of the card networks with consumers and merchants makes disrupting the current system difficult. Many fintech advancements e. Still, there are many existing and new players looking to disrupt the system, and we cannot rule out significant changes to the industry over time.

PayPal is one nonbank player that has established a material market position with consumers, as well as merchants who accept PayPal payments. PayPal still relies to a degree on the card networks as well as banks, but transactions on the PayPal system can diminish the economics for banks, depriving them of fees they would have otherwise collected on a card transaction.

PayPal's person-to-person P2P payment services, including through Venmo, also helped spur the banks to launch their own P2P system of Zelle. Separately, large tech companies like Apple, Google, Samsung, Facebook, and Amazon probably would like to mimic the success of online payment services AliPay and WeChat in China and have also launched digital wallets, interposing themselves in consumer payments. Banks have already experienced some margin pressure, as hardware makers such as Apple and Samsung facilitate card payments and participate in the economics of the transaction.

In the event that a fintech finds a way to disrupt the dominance of the existing card networks, there would be major implications for the current players in consumer payments, including banks. Still, we don't believe this is a near term event.

The Future of Banking Technology Is Here

In terms of areas of loan growth, fintechs have been stepping into niche businesses--largely areas banks have moved away from, either because banks don't have the processes or scale to engage with the customer in a cost-effective manner. Fintechs, for their part, are able to offer customers a better user experience and lower price because of a lack of legacy infrastructure, such as branches. Since fintechs are fundamentally diverse, there has not been a single game plan in regard to the banks' response to threats from technology companies.

Many banks have strategically opted to increase what they are spending on technology, combine in-house teams in partnership with a fintech company, or acquire fintech companies.

Personalizing the customer experience

The below provides more detail into the banks' response so far. For the top 20 banks when the information has been disclosed , we have compiled technology spend as a percentage of revenue and we have also looked at patent formation.

The pursuit of happiness

Banks around the world are taking advantage of new technologies to streamline their operations and give their users a better experience. Traditional banking providers must look further ahead than just a year or two out before the window for transformational change closes.

Sometimes technology expenses are reported and embedded in other line items such as software and equipment , so the full picture may not be complete. Overall, we believe the larger banks have a distinct advantage because, given their higher revenue base, their absolute technology spend is much higher than smaller regional banks.

One prime example of banks' successful spending on in-house technology is the development of mobile banking applications to help enhance the customer experience. Banks have also rolled out digital mobile applications, and small business and personal loan platforms. Many banks have chosen to partner with fintech companies see table 2.

Positively, partnering enables banks to grow revenue in areas that banks lack lending expertise or scale, and post incremental income as a result. Fintechs also benefit from a partnership because it diminishes the costs of customer acquisition, helps monetize innovations in financial services, and overcomes the barriers to expand services across state borders.

In addition, a fintech company benefits from gaining access to a more stable funding via a bank partnership and can use the bank's network to help grow their customer base. Negatively though, from a bank's perspective, a fintech partnership could confuse the branding of a bank. And over time, a bank could be relegated to the role of back-end processor while the higher value, front-end business gets extracted away.

http://maisonducalvet.com/tafalla-agencia-de-citas.php In addition, by partnering with a fintech, a bank can lose the valuable direct contact with its customer, along with the personal data of its customer base. We see a myriad of advantages for banks as stand-alone businesses versus fintech competitors. But fintechs as stand-alone businesses have some advantages, too see chart 3.

Basically, if bank management teams believe they don't have the expertise to develop a certain technology in-house, they will seek a suitable partnership.

The future of banking: adapt or die

Tech titans like Apple, Amazon, Google, and Facebook have so far dabbled into the banking space in a limited way, largely in the payments space. In the lending space, Amazon provides working capital loans to merchants operating on its platform, with a very timely decision processes, using Amazon's insight into the merchant's cash flows that enables the company to offer their clients tailor-made repayment schedules. One of the big threats of the tech titans is their reach and visibility.

Unlike smaller fintechs, they can use their already established large customer bases and digital talent to extend their corporate brands into banking.