COVID-19 has brought about such drastic repercussions, that the banking industry had no choice but to enthusiastically infuse digital technologies such as machine learning and artificial intelligence into its workings. The pandemic brought down economies and left the banking sector, one of the most affected. Unprecedented economic disruptions, a competitive market, and rising expectations from customers have caused high distress in the industry. This has also brought about a promising future for fintech and neo-banks, as customers are forced to switch to digital banking with lockdowns in place and banks being shut down. This trend is set to continue, even after normalcy is returned.
Here are the top 5 banking trends from the year 2020, which could give a glimpse of what 2021 would look like.
Digital Customer Onboarding
One of the most eminent banking trends in 2020 was digitization. Disruptions caused by the pandemic forced banks to invest in digital customer onboarding to keep businesses still running. Some of the critical onboarding problems were data origination, KYC, credit checks, and fraud detection.
Video-based KYC was introduced where customers had to show their ID proofs through a webcam or a smartphone camera over a video call to complete identity verification. This real-time authentication also helped minimize any risks of fraud. Some Asian banks like UOB, DBS, Axis Bank, and ICICI Bank were some of the firsts in implementing smooth and efficient customer onboarding.
Another important banking trend in 2020 was open banking. Open Banking is a secure way through which banks give providers, access to your financial information. You could see a banking trend where banks collaborated with their competitors to monetize data, cross-sell offerings, and gain market share and succeed as banking aggregators.
This helped them increase their revenues without depriving their customers of wide offerings. Customer retention was another added advantage as banks could help their customers by making all necessary products and services available in one place.
Cloud Technology in Banking
Cloud technology is a more cost-effective, faster, and more elastic option to go for when it comes to data storage when compared to traditional on-premises storage. Predictably, the adoption of cloud technology was a significant banking trend in the year 2020.
The need to go for a better alternative arose when banks realized they needed to be more innovative in accessing the right data from massive databases they possess. The cloud helps collect, store, and access data efficiently. Cloud also proved to be effective in enterprise-wide synchronization and smoother customer dealing experiences.
Banks across the globe are struggling to automate their business processes and they’re slowly starting to incorporate AI into their business management. RPA (Robotic Process Automation) is one such technology that most banks have deployed successfully.
There was certainly this banking trend where banks used RPA to improve workforce management, regulatory compliance, and customer interface in digital banking. These robots can seamlessly take over or hand over tasks midway to their human co-workers.
Fintechs deal with innovative technologies that help in areas such as digital lending, analytics, and credit risk. Their technologies are built on efficient use of AI, ML, Data Science, Blockchain, and Cloud. A massive number of banks collaborated with fintech companies to ensure seamless baking experiences in 2020. This proved to speed up their execution in digital transformations and helped meet customer expectations.
Large banks have already acquired high stakes in fintech companies. For example, the Royal Bank of Scotland bought a 25% stake in UK-based Fintech Loot, and HSBC has joined forces with an Australian fintech company called Identitii, etc. Various neobanks emerged in 2020, helping put banking on autopilot with many people availing loans from the comfort of their homes, without the usual hassles from traditional banks.
Yes, 2020 was a disaster of a year. However, the silver lining lies in the banking industry’s resilience and growth, and the adoption of a superior, modern way of banking, with neobanks such as Salt. With Salt, you can get all the features you love from traditional banks at your fingertips, minus the red tape and bureaucracy. Banking has never been this easy before. Join the waitlist now!