Banking has undergone a significant development process in recent years that are reshaping the sector.
The rising trends of cybersecurity, the demand for loans, and competition are the prime factors driving this change in banking. Along with that, it plays a vital role in the modern economy.
Today, entrepreneurs can easily apply for loans for startups, while individuals can save their money for retirement plans. The advancement supports the growth process of the overall economy of the whole nation, thus adding more opportunities for everyone.
Since the financial sectors are already volatile, COVID-19 significantly impacted profitability and credit management for different businesses.
The rising challenges of consumer behaviors and the cost of risk have new trends for banking in 2021. As the vaccination drives roll out around the world, there are high hopes for the industries to revive after the cool-down from lockdowns.
But still, the pandemic has left an everlasting, thorny impact that will shift the trends with more focus on uncertain risks. With that said, let’s discuss how banking is surviving in 2021.
1. Rise Of Instant Payments
Last year, the world shifted to cashless and instant payments. Digital banking is another name for these methods of exchanging money instantly.
Since most people were confined to their homes, mobile wallet services became the top applications. Numerous modern banking apps like Greenwood are becoming increasingly popular because of the ease of transferring money. Whether you are shopping online, paying bills, ordering groceries, or donating money, everything is just a tap away.
Moreover, the experts believe that COVID-19 has left a long-lasting impact on consumers in terms of banking. This means that the post-pandemic world will continue to follow this cashless payment with more advanced measures. For that instance, bank apps must set up instant pay options to offer diverse services to consumers.
This is what banks in Kenya are doing with an efficient peer-2-peer payment network. This payment infrastructure can combine with municipal and retails online for the new range of services for cashless payment.
2. Open Banking
While applying for the loans, you might have come across the term of open banking. Since loan application requires information from a variety of sources to determine the credit history.
There is a dire need for an efficient system for lenders to determine the eligibility of the borrower. This is where “open banking” is stepping in to solve the matter. As the name implies, open banking allows sharing your financial data with third parties to get more value from your finances. This banking will allow third-party providers to access financial data to devise efficient solutions as well as the worthiness of the borrower.
This impactful innovation will utilize the advanced application programming interfaces (API) to access the financial information of the users. The data will open opportunities for the business to develop new applications and services tailored to users’ needs, thus enhancing their banking experience.
Meanwhile, people are still questioning whether it is safe or not. According to experts, open banking aims at sharing data securely to the third parties companies.
Not just companies but banks can also employ consumer data to understand the rising demands of customers and engage with new audiences. For instance, innovative open banking can promote the development of effective application solutions that will enable consumers to see their credit scores in real-time.
3. Artificial Intelligence For Personalization
In 2021, consumers demand personalized experiences from every sector. Especially, the consumer groups are more likely to engage with a personalized experience from the banks rather than the traditional setting.
But the real problem is that they hesitate to share personal information. Personalization is a total game-changer for banking. Fintech has been targeting consumer groups for over a decade, and now they have enough information to implement personalization.
For that purpose, banks are also utilizing Artificial Intelligence to allow personalization for consumer groups. This technology will target these groups based on their interests and activities online. Not just that, but it will also monitor consumer behavior for fraud and risk management.
Several businesses are already utilizing the power of AI for consumer interests and target them with personalized marketing. Banks should also employ and leverage consumer data to automate personalization campaigns for smooth and seamless financial recommendations.
4. Banking With Enhanced User Experience
Now, with more people adapting to mobile banking, there is a dire need for an advanced user experience. No one wants to see their financial data on boring excel sheets and start calculating.
In fact, consumer behaviors are shifting towards more appealing and creative designs that boost interest in the financial performance of digital devices. Banks are coming forward to offer these enhanced solutions of user experience with detailed transactional data for consumers.
The user-centered approach adds more customer satisfaction and motivation to manage the finances effectively.
5. Reducing Accounting Mistakes
As technology continues to replace manual tasks, it significantly minimizes the risk of accounting mistakes.
Banks are utilizing new and advanced accounting software for timely reconciliations and data entry errors. This software makes the accounting process a lot easier by saving them and through collaboration on an online cloud.
6. Robotic Process Automation
Robotic process automation is another prominent trend that is enabling businesses to increase productivity. This technology easily replaces the human workforce to monitor the investment opportunities and saves cost.
The vital role of banks in the modern world is adding these automation tools to increase operational efficiency and generating quality reports for business strategies.
7. Focus On Cybersecurity
Cybersecurity is the prime concern all over the globe. Now, with most of the transactions and financial procedures processing online, the risk for cyberattacks has increased manifold.
Consumers demand secure and high transparency for their daily finances. For that instance, banks must take the right measures to ensure a high level of security from data breaches and phishing scams.
Today, banks are also educating consumers about the latest practices of hackers to avoid financial loss. These cyberattacks are an imminent part of our lives today. However, banks can provide sharp cybersecurity to assist consumers in securing their finances.
The consumer group is finally adapting to the new normal of banking with more focus on digital payments and automation.
Along with speed and convenience with the new normal of banking, banks have consumer data as the key to unlock the insights. With these details, they can easily trade the value demanded by consumers for trust and loyalty.
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I am Adeyemi Adetilewa, a media consultant, entrepreneur, husband, and father. Founder and Editor-In-Chief of Ideas Plus Business Magazine, online business resources for entrepreneurs. I help brands share unique and impactful stories through the use of public relations, advertising, and online marketing. My work has been featured on the Huffington Post, Thrive Global, Addicted2Success, Hackernoon, The Good Men Project, and other publications.