Recent Developments in the Banking Industry: Innovations for a Brighter Future

The banking industry is witnessing significant transformations driven by new technologies, changing consumer behaviors, and a shift towards a more digital future. Over the next five years, several innovations are set to revolutionize the industry, providing greater convenience, security, and efficiency to banking services.

New Banking Technologies You’ll See in the Next 5 Years

Banks are stepping up their game to embrace advanced technologies, enhancing the overall banking experience for consumers. Here are some of the key innovations that are likely to shape the banking landscape in the coming years.

Blockchain Technology

Blockchain technology is set to fundamentally transform banking and financial services. Unlike traditional centralized systems, blockchain technology decentralizes financial management across a widespread network of computers. Financial transactions are broken down into encrypted 'blocks' that are then added to a 'chain' of computer code, enhancing cybersecurity. This technology, based on other banking trends like Bitcoin, has the potential to improve numerous facets of banking.

According to the Wharton School of the University of Pennsylvania, blockchain will change the banking industry fundamentally. The potential applications range from secure transactions to regulatory compliance and beyond. As blockchain startup CEO Blythe Masters noted, it can be likened to 'email for money.'

Upgraded ATMs

ATMs have already transformed the way banking is conducted, but the next revolution in ATMs is likely to involve contactless payments. Imagine conducting transactions using your smartphone instead of a physical card. This is a future that is not far off, as several technologies are already in place or being tested around the world.

For example, biometric authentication and iris recognition are already being used in Indian and Qatari ATMs, respectively. These innovations can help improve overall bank security by protecting against ATM hacks. The convenience and security provided by contactless payments are likely to attract a wider demographic of tech-savvy customers.

Proliferation of Non-Banks

Banks are facing increased competition from non-banks, which are not regulated by the traditional banking industry. These companies can allocate a greater percentage of their assets to cutting-edge financial technology, potentially allowing them to innovate more rapidly. As a result, they can attract tech-savvy customers who are constantly looking for faster, more transparent, and innovative banking solutions.

Apple Store-Style Experience

The future of banking may resemble the experience of shopping at an Apple store. Banks are considering transforming their physical branches into more user-friendly environments, where customers can engage with tech kiosks for basic transactions and receive personalized service from bank employees for more complex needs.

Automated Financial Services Employees

Artificial intelligence powered by machine learning and cloud computing is transforming banking operations. Up to 30 percent of banking jobs could disappear within the next five years due to these technological advancements, as noted by Vikram Pandit, who ran Citigroup Inc. during the financial crisis. Many employees are already adapting to new roles or seeking positions outside the traditional banking sector.

Mobile and Digital Banking

The mobile and digital transformation in banking has only just begun, but it is already experiencing explosive growth. Banks are investing heavily in digital banking technology, allowing customers to use mobile web or digital platforms to handle their banking services. Artificial intelligence solutions like chatbots are assisting customers in simple tasks such as making payments. According to an Forbes survey on banking customer engagement, 86 percent of banks indicated that these types of services represent their top technology investments.

Partnerships

Traditional banks are realizing that the fastest way to deliver financial innovation in the future is through strategic partnerships. Companies with existing fintech or social media platforms can be excellent partners for traditional banks seeking to enhance customer experience. Card-linked marketing company Cardlytics is partnering with financial institutions like Bank of America to leverage secure purchase data in order to tailor marketing based on consumer card use.

Wearables

Wearable technology, such as smartwatches, is poised to become the future of the retail banking experience. For example, banks could use Bluetooth beacons to push personalized greetings to customers' smartwatches when they enter a banking location. Smart glasses for bank tellers could process customer banking information in real-time as the employee is simultaneously doing other customer service tasks.

Overall, consumer behavior and smart device trends are steering banking technology advances in the direction of convenience. As more remote technologies become available, customers can interact with their banks from the palm of their hand. This shift towards a more digital and convenient banking experience is likely to accelerate in the coming years.

Keywords: banking technology, blockchain, mobile banking