15.04.2021 Articles

Thursday, 15 April 2021 | By Nikos Karelos, Banking Director at Profile Software

The pandemic has accelerated digital transformation in banking, leading banks to faster adopt new digital delivery models and enhance UX through digital technologies. The rise of neo and digital banking became the new normal, with an emphasis on mobile banking services.

Industry analysts predict the pandemic will only help these new, digital trends become a reality faster.

Digital trends in Banking

The contribution of AI to the global economy

Adoption of artificial intelligence (AI) across many different operational areas in banking is constantly gaining ground. Financial institutions appear to be very active in engaging AI in a spectrum of services, ranging from sales to credit scoring and end-user behaviour prediction to fraud detection.

AI is expected to contribute a staggering $15.7 trn to the global economy by 2030, with 74 percent of organisations that have implemented AI recording increased sales of new products and services by at least 10%, according to a recent report by W.UP.

Optimising the customer experience

Process automation using RPA technology, along with the digitalisation of opening and managing customer accounts and the enhancement of mobile services (based on client habits) are attracting greater investment by banks in 2021. (Sources: MoneyThor and UX Design).

Banks are investing in these areas with the aim of evolving mobile banking into an intuitive, multi-functional tool that empowers the customer and enabling them access to a full range of financial services in a fresh, colourful and personalised user experience on par that delivered by major technology companies.

Open Banking as a revenue opportunity

According to Juniper Research, the number of open banking users is expected to double from 18 million in 2019 to more than 40 million users by the end of 2021. (Source: The Financial Brand).
“The API economy is an enabler for turning a business or an organisation into a platform. Platforms multiply value creation because they enable business ecosystems inside and outside of the enterprise to consummate matches among users and facilitate the creation and/or exchange of goods, services and social currency so that all participants are able to capture value,” according to Gartner.

Introduction of Open Finance

With Open Banking unveiling its full potential and being implemented by numerous countries around the world, it is time for the broader financial sector to take advantage of the same successful principles. Having moved to the next level, a new era of Open Finance has arrived as a natural extension of Open Banking data-sharing principles that have enabled third-party providers to access customers’ information across a broader range of financial sectors and products, including savings and investments.

Sustainable finance

Financial institutions are looking to address investment opportunities and provide lending to low-carbon and sustainable sectors, businesses, and projects. As a result, more and more banks recognise the need to integrate environmental, social and governance (ESG) factors into their investment decision-making.

Upgrading the user experience in banking platforms

The user experience in banking platforms has become increasingly more important in recent years. As such, investment in digital transformation has increased, with capital allocated to improving back-office systems as well as front end applications. The back-office user experience needs to be reimagined and redesigned to create a data-drive and above all friendly experience for the end user, where speed and ease of use are available to all.

Migrating to the cloud

The extended use of new technology and digital offerings also increased the vulnerability of clients to online risks and fraudulent activities. Although slower than anticipated, there has been an increase in the use of cloud technology and cybersecurity solutions, successfully restoring the sense of safety for both banks and consumers. The use of hybrid cloud infrastructures will escalate significantly in 2021, offering a safer and more efficient way of banking.

Updated working models

Across the entire banking ecosystem, financial institutions are rethinking the way they work, where, and the skills required to do the job. What initially was remote collaboration necessitated by a global crisis has recently become the new normal in a post-pandemic world.

Furthermore, implementation of new technologies, such as AI and RPA that are applied in banking software will allow bank staff to focus on more productive activities rather than carrying out complex operations on back-office systems.

Banking-as-a-Service (BaaS)

As a result of the extended adoption of Open Banking, BaaS platforms enable fintechs and other third parties to connect with banks’ systems via APIs to build banking services on top of the providers’ regulated infrastructure. The launch of BaaS platforms helps banks benefit from fintechs entering the financial space, as it turns them into customers rather than just competitors.

Key takeaways

User experience remains in the spotlight, both for customer and back-office users, with banking platforms evolving to accommodate stronger UX designs and incorporating the use of AI tools to strengthen personalisation of banking offerings and enabling users access to the full range of banking activities. Furthermore, automation and streamlining of processes, combined with the adoption of cloud infrastructure, allow banks to experience continuous, uninterrupted, operations utilising human resources accordingly to increase their market share. The successful implementation of Open Banking, apart from the apparent flexibility it provides, has created new opportunities and revenue streams for banks, as well as opening the path towards Open Finance across the financial services sector.

Profile’s Finuevo Core banking platform allows traditional, neo and digital banks to achieve their business objectives through automation of tasks throughout the entire spectrum of operations. It is constantly being enriched with functionality and frontend features that offer a better, easier and more complete user experience while ensuring uninterrupted operations at any time.