Though banks often take much of the blame when the economy takes a dive, we'd be helpless without them. These institutions float us the money that allows us to build our lives, and without them society would devolve into a Wild West-style, robbery-ridden hellhole. So we should probably stay up on where banks are heading in the near and long-term future.
These industry insiders shared their insights on the technologies most impact banking. Here's what they said:
1. Shai Stern, Co-Chairman and CEO of CheckAlt
“In 2019, instead of paper payments converting to electronic, the online bill pay system is taking electronic payments intended for millions of small- to mid-sized billers and printing them to paper. When an online banking bill payment goes from electronic to paper, three costs occur: the paying bank has to print a check, the receiving bank has to pay to have that check processed, and the payer often has to dispute a late charge because the check is mailed after the due date. The banking industry needs a solution that prevents online bill pay checks from ever entering the system.”
2. Per Christian Goller, CEO at Aprila Bank
“It is tough to pick one… In the slightly longer term it will probably be blockchain tech, but in the nearer term:
We focus on data analytics and ML. Our analytics perform reporting, predict outcomes, price risk and discover anomalies. This is extremely useful today, to enable scaling on technology and building competitive advantage.”
3. Patricia Russell, CFP, founder of FinanceMarvel
“Having seen the emergence of artificial intelligence in recent years, with
banks like Wells Fargo knowing your most commonly preferred withdrawal and
deposit habits, the future of banking will certainly become dependent on artificial intelligence. Although artificial intelligence services like this and others will become more and more helpful to consumers, the technology which will most likely have the biggest impact on the banking industry will be blockchain technology. Replacing a slower, outdated model of banking with an upgraded one which uses online consent and instant, secure transfers will radically alter the pace at which everyone can operate and will thus even raise the collective consciousness of the world at the same time.”
4. Wes Garner, President of TDECU Wealth Advisors
“The biggest technological impact will come from FinTechs, which will force banks to create a better consumer experience if they are going to survive. To create a better consumer experience:
-Transactions will begin to occur in real time.
– Financial products will improve to better meet consumer needs or they will go away.
– Mobile will be the new branch location for simple transactions.
– Financial institutions will focus more on providing meaningful financial advice to meet consumer demand.
– Consumers will begin interfacing with artificial intelligence, however they may not even know that it is occurring.”
5. Chris Tremont, Executive VP of Virtual Banking at Radius Bank
“Banking as a service (BaaS), or banks implementing open API platforms, is going to make a swift impact on the industry. Just a few benefits include a reduction in transaction fees, better customer experience, quicker speed to market for products and services and reduced security risk. We expect to see momentum ramp up considerably in the second half of 2019, with some really exciting and innovative services and strategic partnerships hitting the market.”
6. Sanat Rao, Chief Business Officer & Global Head for Finacle at Infosys Limited
“About fifteen years ago, more than half of all banking transactions occurred within the branch network; today, that number is down to less than 10 percent. The bigger news, however, is that by 2022, at least one in two transactions is likely to flow through channels not owned by banks but by a multitude of digital ecosystems, FinTechs, and other third-party interfaces, thanks to open banking and the rapid rise of digital channels.”
7. James D'Arezzo, CEO of Condusiv
“Blockchain, but banks need to be ready to handle this data-intensive technology that can be disappointingly slow. As blockchain-based applications come in on top of the existing data volume, the danger of major system slowdowns will increase dramatically. Blockchain speed issues will be exacerbated by the performance characteristics of Microsoft SQL server, the database used by many large-enterprise IT operations. SQL server is a major bottleneck hampering overall system performance—even without processing blockchains. Banks can handle current data more efficiently and prepare for blockchain by using intelligent software that identifies, reduces and streamlines the most heavily used data input/output and greatly enhances SQL server throughput.”
8. Oliver Browne, Credit Industry Analyst at Credit Card Insider
“A virtual credit card number works as a disposable representative of your real card, with different details. It’s a generated temporary credit card number directly linked to your actual credit card account.
This helps protect your information. If a hacker steals your virtual credit card or your information is taken in a data breach, these won’t compromise your actual credit card account.
Virtual credit card numbers also come with other security features such as the ability to set specific spending limits or time frames for which the number is active.”
9. Alexandra Zelenko, Marketing and Technical Writer at DDI Development
“Five percent of banking organizations suffer from fraud and cybercrime every year. Nowadays, a wide number of people use their smartphones to make payments online as an alternative to traditional banking. However, there is a risk of your private data being intercepted by a hacker or some other third party. That’s why blockchain technology can be very useful to prevent cybercrime in mobile banking in 2019.
Blockchain could reduce banks infrastructure costs by 15-20 billion U.S. dollars by 2022 providing no ‘hackable’ entrance or a central point of failure and, thereby, providing more security when compared with various present database-driven transactional structures. Most of the banking systems around the globe are built on a centralized database. It makes them more vulnerable to cyber attack because once hackers breach the database they have full access. On the other hand, blockchain is a distributed ledger where each block contains a timestamp and holds batches of individual transactions with a link to a previous block. This technology would eliminate some of the current crimes being perpetuated online today against banking organizations.”
10. Travis B. Bailey, Regional Executive Senior Vice President at First Bank
“The answers to questions 2 and 3 are related. In my view, the biggest trend shaping the banking industry is increased demand for treasury related tools and services. More than ever before, customers are demanding services such as online wire tools, ACH payment and collection tools, fraud protection and alternative deposit vehicles. These tools allow customers to take control of cash management and allows bankers more time to add value through a consultative relationship, in lieu of being strictly price driven.”
11. David Bakke, Writer at Money Crashers
“The technology that will probably have the biggest impact on the banking industry is that which allows banks to process payments more quickly. There's a good bit of competition in that area, but one of the front-runners is something called Real-Time Payments. A good bit but not all of the bigger banks are currently using it, and most of the little guys have yet to adopt it. The Federal Reserve, believe it or not, may soon start using this or a similar system as well. This is good news for consumers, as a faster payment on either end of any transaction in most cases is beneficial.”
12. Tracy Sestili, Head of Marketing at SparkPost
“In the past banks used to be focused on software that was for the infrastructure, but now as AI and blockchain technologies evolve, banks are more focused on customer-facing technology, specifically ones that help them deliver the best customer experience. Moving forward, anything from deposits to mortgages, it's going to be all about data and using data to customize and tailor a 1:1 personal experience for the end user without seeming creepy.”
13. Jordan Friedman, CEO of Zodaka
“The easy answer would be Blockchain, and undoubtedly this technology will have a huge impact on banking. However, I think there is something bigger that is more banking specific: cloud based “banking in a box” solutions. These sorts of software companies enable any bank to have the feature set of a major institution. The industry needs this because it will force the banks to be more competitive. This is very important because smart small and midsize banks have an opportunity to future-proof themselves and their business models to leapfrog most of their competition.”
14. Mads Hennelund, Advisor to Nextwork.as
“Blockchain will likely have the biggest influence on the banking industry as we know it. But it's not that likely to really ‘happen' in the near future. Advanced AI and voice represents a big change to the industry as well. In Denmark, we are seeing touch and fingerprint aproved transactions. But that's really just the new industry standards. What's really transforming the industry right now is opern banking, APIs and new ecosystems around the customer's finansial data. Combined with increasing focus on the customer journey, this ‘seamless customer experience' across ecosystems is biggest technology related impact on the banking industry.
15. Andrew Daniels, Managing Director for Degree 53
“AI and machine learning is probably the most versatile in how it can be used and scaled across entire banking systems. Most importantly, it is used for security and fraud detection. But it can be applied to improving customer services and increasing their interactions with the bank. For example, offering products tailored to their lifestyle and average spend, such as rewards, savings, loans and insurance. The development in AI has made it highly automated so banks can significantly reduce manual processes and operational costs.”
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