5 Disruptive Technologies Overtaking the Traditional Banking Model

5 Disruptive Technologies Overtaking the Traditional Banking Model

Banking is a competitive industry, and the form of industry competition is changing. The playing field is transforming thanks to the rise of disruptive technologies. The financial service industry must rise to the challenge of disruptive technologies and the expectations of enhanced digital experience models to remain competitive.

Google is the most prominent example of technology innovation. The new company to take advantage of technology is Uber. This time, Uber has brought two unique technical aspects, namely ‘mobile apps’ and ‘sharing economy.’ Tom Goodwin illustrates the success behind the apps and sharing economy and how the companies can act as the middlemen by overtaking the customer interface.

And here’s how Fintech app development, sharing economy, and customer convenience has paved the way for technology innovation in the financial sector.

1. Machine learning and Artificial Intelligence

Banks are under pressure to meet the rising demand for online and mobile banking services. They need to track everything from payment through account checks, transfers to upgrades, and much more. Here’s how machine learning can contribute to its distinctiveness for the financial service industry.

  • Machine learning is the key for the banks to process a large amount of raw data into incredible speeds.
  • It also helps them to analyze the data against different sets of pre-determined criteria.
  • Credit risk management, financial reporting, security, and trading floors are some areas where machine learning is contributing to its attributes.
  • The machine learning platform can be coded to identify use patterns and detect anomalous network behavior like malware, cyberattacks, and other threats.
  • It can help with compliance, running automatic tasks that adhere to changing regulatory demands.
  • It is used to develop personalized services by harvesting a large amount of customer data.
5 Disruptive Technologies Overtaking the Traditional Banking Model

Financial capabilities and business needs have laid the foundation for AI. Besides, the below reasons have created a perfect storm for the expanded use of AI in financial services.

  • Availability of new technologies like cloud computing, machine learning
  • Extensive growth of structured and unstructured data
  • The constant pressure of new competition
  • Increased regulations
  • Intense customer expectations

The benefits of machine learning and Artificial Intelligence in banks and credit unions are widespread. They are reaching back-office operations, intuitive customer experience, risk management product delivery, compliance, and marketing, to name a few. With AI, the banks can work with long histories of data and can make an informed decision.

2. Online and mobile banking

The fact that many customers now favor the speed and convenience of managing their transactions digitally is no surprise. The rate at which online and mobile banking is conducted outstrips the previous predictions. The modern customer wants their banks to offer convenience and high-tech banking options.

According to a report presented by JP Morgan Chase & Co, more than 33% of consumers are using mobile apps and 35% of consumers started online banking when compared to last year.

This data exposes the pervasiveness of online and mobile banking which is a development from traditional brick and mortar branch locations. The study also reveals that millennials are the top adopters of mobile apps, and the majority of Generation X are embracing mobile banking.

5 Disruptive Technologies Overtaking the Traditional Banking Model

Moreover, the advantages of online and mobile banking apps for customers are promising.

  • Online and mobile banking enables consumers to make the payment on the go.
  • Banking is available anytime, anywhere.
  • Customers can transfer funds, invest in the stock, exchange currencies without any interruptions, and waiting time.
  • Mobile banking offers quick support, speedy payments, and fast turnaround time.
  • It offers real-time updates on any transaction with multi-level security features like OTP to registered mobile number for authentication.

Customers can have their banks in their pockets, and the online and mobile banking benefits are not only limited to them. Technology innovation is contributing a significant impact on the workings of the banks too. With the help of banking apps, financial organizations can

  • Study a single customer profile and analyze spending habits.
  • Collect, analyze, and process structured and unstructured data.
  • Provide personalized offers accordingly, according to the gathered data.
  • Automate their financial processes and minimize human errors.
  • Follow the rules and guidelines recommended by the authorities consistently.

3. Peer-to-peer payment

Peer-to-peer payment is becoming popular among people of all ages with no signs of slowing. It is expected that mobile peer-to-peer transactions could reach $86 billion in 2019. With the P2P payment experience, the banks are gathering a more extensive customer base.

The availability of P2P platforms offers banks an exciting opportunity to achieve their transaction speed which enhances the user experience and increases customer satisfaction. With P2P, more transactions are made digitally instead of cash, making the payments less expensive and more user-friendly. Now making payment is a few seconds away rather than two-three business days.

5 Disruptive Technologies Overtaking the Traditional Banking Model

P2P payment is all about flexibility, convenience, and speed. Now you cannot make the “I forgot my wallet” excuse anymore. PayPal, Google Pay, Amazon Pay are a few big players of P2P payments. By expanding the combining of instant capabilities with e-commerce and m-commerce, the banks and credit unions could create an innovative portfolio with the help of android app development services.

4. Blockchain

Experts say blockchain could have a revolutionized effect on the banking sector. Many banks already adopted blockchain technology to

  • Improve efficiency
  • Cost-effectiveness
  • Enhanced security

Being a decentralized ledger, some financial organizations have started testing blockchain for inter-bank transfers, fraud detection, and loan processing. Some of the international banks like JP Morgan invested in blockchain app development to reach beneficiaries with fewer steps in cross-border payments.

5 Disruptive Technologies Overtaking the Traditional Banking Model

Blockchain-based smart contracts are helping make banks and other financial organizations more secure, cost-effective, and efficient. A smart contract is a computer program that directly controls the transfer of currencies and assets between the two parties. The financial service industry is the ideal place for using smart contracts along with blockchain app development.

The use of smart contracts in commercial transactions can

5. Intelligent Automation

Automation has helped the banking sector to accelerate growth by executing pre-programmed rules according to the range of structured and unstructured data. This smart automation processes the power of machine learning and deep learning from prior decisions and data patterns to make decisions themselves. It reduces the cost of the administrative and regulatory processes by 50% while improving the speed and quality.

According to a report, financial services could reap more than $510 billion in new global revenues through intelligent automation. With the enormous gain, the financial service industry is using a few applications like:

  • Robo-advisor
  • Chatbots
  • AI-based virtual bots
  • Hybrid clouds
5 Disruptive Technologies Overtaking the Traditional Banking Model

The commercial service industry must unleash this intelligent automation to lead the new way of innovation. Besides, other automation like robotic process automation, natural language processing, and virtual agents can help banks to improve efficiency and productivity in many ways.

Automation does not stop there. The banks can implement a self-learning process which empowers their employees, strengthen customer relationships, and open new forms of creativity.

Conclusion

We are on the edge of some exciting time in the fin-tech service industry. Today’s consumers carry around a powerful computer in their pockets and are ready to manage their finances in the most exciting ways.

The commercial service industry must win these big battles with the help of android app development services for providing an unmatched customer interface. Banks must need to deliver disruption, which is necessary for the core financial industry models for driving positive outcomes and withstand the competition.

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About the author
Sahil GuptaCEO at Parangat Technologies

With roll up the sleeves, dive in and get the job done approach, it was year in the year 2010 when Sahil started Parangat Technologies. Emphasizing on a healthy work culture and technology driven company, he has successfully created a workplace where...

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