An overview of the trends in banking shaping the future of digitisation.
The world of banking has been transforming in the past few years owing to a technological revolution in the global banking sector. Today, almost all banks worldwide, including Indian banks have an online presence, thus catering to their customers needs. The demonetisation of 2016 and the onset of Covid-19 pandemic played a significant role in making digitalization in banking more mainstream.
Due to these factors, the reliance on digital banking modes for making payments and accessing funds has increased in both, the urban and rural areas of the country. The dependency is only going to evolve with new technologies and trends emerging all the time. Read on to learn about the emerging banking technology trends in 2023 that will shape the future of digital banking in India.
Some of the emerging trends that can create new opportunities in the digitisation of banking include the following:
Customer experience has always been at the heart of the banking sector. As most banking facilities offer ease of transactions, convenience has become a standard customers have grown to expect. Hence, banks are gearing up to do more in terms of security, faster transactions, and better customer support. The efforts for the same involve an emphasis on creating a simpler user interface and easy navigation on the bank portals, mobile banking apps, etc. Additionally, banks are working towards designing their services and facilities in a way that minimises manual hassle as much as possible.
The preference for contactless channels for shopping, fund transfers, and making payments has increased in the last couple of years. Most customers tend to prefer facilities offering easy digital transactions instead of using physical modes, such as visiting banks to encash cheques, update passbooks, obtain statements, etc. The trend is likely to continue to gain traction in the coming year. In order to provide these seamless facilities, banks are working on strengthening their digital presence and adopting new technologies for innovation in the space.
The use of Artificial Intelligence or AI in banking services acts as a boon in simplifying complex operations and providing prompt support to customers. By integrating AI and chatbots designed to answers common queries within seconds, banks can offer 24*7 virtual assistance to their customers. The use of AI technology in banking sector in India is further being explored for managing customer data. Additionally, AI also serves as a helpful and useful tool that aids in fraud detection, which is a vital issue that the banking industry has been working on combatting for years.
Another emerging trend in banking is the boom of Neobanks, also known as digital-only banks. Since these digital banks do not have a physical branch to maintain, they offer all banking services via their eponymous banking apps. As a result, the need for customers to visit the bank branch for any service is entirely eliminated. You can easily access all banking facilities digitally. Moreover, the non-existence of physical presence reduces the cost of maintenance like rent, electricity, and other overheads. Hence, neo banks offer cost-efficient services. That said, Neobanks may not offer 100% of the same facilities provided by traditional banks.
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Open banking or banking through Automated Programming Interface (API) is still in its early stages in India. With API, banks can share data with third-party fintech providers. Due to such integration of data between banks and third-party financial institutions, new opportunities for cross-selling are created. Hence, you can get access to expansive financial product categories under a single platform as a customer. The growth of open banking is underway, and it will focus on new service creation, while protecting customer data.
Sometimes, making hefty payments can impose a financial burden. Hence, the ‘Buy Now Pay Later’ option started surfacing in digital banking over the last few years. With the advent of BNPL banking technology trend, you can shop for any product without making an upfront, full-price payment. You can make flexible payments via equated monthly instalments (EMIs). Considering the affordability and convenience, BNPL is estimated to progress and extend to wider product categories.
Blockchain technology is an advanced database system that allows transparent and secure record-keeping of financial transactions. Due to digitalization in the banking sector, the use of blockchain technology is paramount. It holds relevance in securing your data when you use banking services. Currently, banks are using blockchain technology to secure simple transactions and money transfers. In the future, blockchain may also be applied for KYC compliance formalities, trading of securities, maintenance of digital currencies, etc.
As banks seek to grow in the competitive market, the need to deliver personalised and efficient banking services grows. Big data & analytics assist with the same. They are components that facilitate prediction of customer behaviour and preferences. Hence, the importance of big data & analytics is indispensable in the banking sector. It is only expected to grow in the next few years with banks using it to improve their customer acquisition efforts.
The dependency on bank personnel to assist with banking activities is a time-consuming hassle. Hence, you may find it convenient to use self-serving tools. However, banks today facilitate self-services with Interactive Voice Response (IVR), kiosks, multifunctional ATMs, and mobile banking apps with all the banking facilities available at your fingertips. Innovations to include better, additional self-service tools are another new trend in digital banking.
Gone are the days when creating a website required extensive coding knowledge. Nowadays, one can create websites with minimal to no coding. Such efficiency saves time and avoids reliance on expensive, professional IT services. Hence, even small-scale banks can create robust websites within a few days instead of months without high-end coding services. As these banks enter the digital space with low/no-code platforms, they can provide quick services and face the cut-throat competition in the banking sector.
The banking technology trends listed above are a testament to the rapid evolvement of the growing Indian banking sector. As trends develop, banks will recognise other existing gaps in facilities, paving the path for newer technological innovations. Most of the new trends are more have played a vital role in streamlining banking services. As a customer, you can benefit from adapting to the changing trends and bank with convenience.
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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.