Technological advances in the banking domain help elevate security and operational efficiency, while also enhancing the overall customer experience. Kavan Choksi points out that, for instance, artificial intelligence (AI)-powered anti-money laundering (AML) is used in many banks today to make it faster and simpler to screen customer profiles. On the other hand, technologies like blockchain-enabled smart contracts are highly useful in improving transparency and streamlining financial transactions.
Kavan Choksi points out a few trending technologies in banking for 2023
The Covid-19 pandemic promoted business leaders across all sectors, including banking, to speed up their digital transformation efforts. Modern users of financial services are migrating to the digital realm progressively, and a large number of them today prefer online services over traditional ones. As a result, banks need to be proactive about incorporating cutting-edge technology into their services. Trending technologies in the banking industry includes:
- Artificial Intelligence: AI allows banks to offer high-quality banking services to their discerning customers and save on operating expenses. AI powered tools like chatbots and virtual assistants are used for automating customer service interactions. Moreover, they offer customers with vital account details can resolve account related queries in a seamless manner. AI-enabled biometrics can detect fraud and even enhance KYC checks and AML applications. Machine learning (ML) algorithms help in powering alternate credit score modeling allowing banks to make improved lending decisions. Computer vision enabled tools, on the other hand, simplifies document analysis and aid banks in the process of compliance management and customer on-boarding. AI analyzes large chunks of datasets to improve financial forecasting and risk assessment with the aim of making better investment decisions.
- Open Banking: Open banking connects banks and non-banking financial companies (NBFCs), and provides customers with tailored, more accessible financial services and solutions. Banking application programming interfaces (APIs) allow third-party developers to access customer financial data securely, without compromising data compliance in any manner. Open banking also includes aggregators that help customers in managing their bank accounts via a single platform. With APIs, banks can integrate a variety of banking functionalities into their apps. They are able to verify customer information automatically with this embedded banking approach, thereby doing away with the need for manual verification.
- Hyper-Personalized Banking: Customer retention can be majorly improved by providing a personalized banking experience. Hence, many banks now make use of a range of technologies and strategies to tailor their offerings. Omnichannel banking, for example, offers a unified, customer centric view of financial information while allowing users to interact with banks via multiple channels. Wealth management and financial advisory tools additionally do offer improved customer satisfaction. As a result, many banks nowadays make use of machine learning and AI to offer such real-time personalized financial recommendations.
Kavan Choksi points out that in addition to the technologies discussed above, even blockchain is widely used in the financial sector of today. It aids in improving transactional transparency and security, and offers tamper-proof records of all financial transactions. Moreover, it aids in improving trade efficiency through transaction automation, while also streamlining manual and paper-based operations. Smart contracts are useful in automating financial transactions, and eliminate the need for intermediaries.