The Banking Industry Must Make Innovation Their #1 Priority

Empowering Innovation and AI

AI is driving the banking and financial services markets of the future. Gartner, the world’s leading research and advisory company, explains that the two key components of AI, Machine Learning and Deep Learning, will be considered as the norm by 2020. The urgency and energy are REAL.

Read more here: The Future: Artificial Intelligence and the Banking Industry

AI is a series of technologies: natural language processing, computer vision, machine learning, deep learning, and neural networks. They are blended within a cloud-based environment that stores and processes tremendous amounts of data that allows for asynchronous AI interactions.

Not be be confused with AI, Machine learning works with data that is built through cognitive techniques, working with real interactions with humans utilizing data to make decisions. This extends the capabilities of humans and machines beyond what each can do individually.

No one can diminish the capabilities of AI. Where can it have its largest impact? Process automation and data mining within operations and risk management have been clear targets. AI capabilities were first seen as an augmentation to data analytics. The concept determined that the machine learning component of AI would allow for improved processing of middle and back-office data while reducing human intervention and the potential for errors. This intent was for automation, optimization and that the predictions of AI replacing humans are even more concerning.

The overall intent of AI in banking is to deliver highly personalized, enhanced customer experience along with effective and efficient time-saving services. The pioneer banking institutions are implementing AI that can make the most impact on banking operations from customer service to fraud detection.

Banking Technology Innovation Transforming the Customer Experience

Technology continues to get smarter every day. AI will help all banking customers have safe and secure banking experience. Banks are implementing technologies by transforming the way customer experience is sustained.

Voice Search is Here

The greatest opportunity in banking is voice technology. To maximize brand awareness and give your customers what they want, you need to invest in a voice strategy.

By 2020, 50% of all searches will be conducted by voice. Currently, 50 million Americans own a smart device (Amazon Echo, Google Home, and Apple HomePod). Financial institutions need to pay attention to this statistic. Voice search is here. This is a customer experience opportunity that banks need to seize and deliver hands-free banking services.

Imagine Alexa providing a daily briefing for a customer regarding debits to their checking account, balance alerts, and upcoming bill payments. Voice will allow customers to be more in control of their money. Banks are implementing Alexa Skills that check account balances, provide payment due dates, review account transaction history, and even make payments with Voice.

The personalization of Voice is making these interactions more human. You can now ask Alexa questions such as “What bills are due this week?” and “How much money did I spend on Friday?” making it more of a human connection with the customer.

Digital Banking and Mobile Banking

Digital transformation in the banking system has commenced and grown exponentially. Investments in new banking technologies have been bolstered, for customers using digital platforms, mobile, and the internet to utilize banking services.

AI, specifically chatbots, assist customers with making payments. According to a recent Forbes 86% of banks indicated that AI for banking customers represents their #1 technology investment. AI examines the financial databases making it easier for the bank employees to suggest, forecast and deliver individual financial services to bank customers. It is now possible to obtain on-demand information for financial strategies, loan rates, and market futures.

The future of AI in banking is promising. The benefits of AI enhances the customer experience, saves time for the customer and the bank, reduces human errors, builds trust and loyalty with customers, and increases the speed and accuracy of cash and cashless transactions.

Read also: Are you prepared to replace your plastic cards with a digital wallet?

The Apple Store Experience in the Banking Industry

The Apple Store experience may be the future for banking. Customers download intuitive bank apps or locate ATMs that perform banking transactions, today’s banking customers require assistance that involves personal interactions.

Banks are considering transformation as a way to engage customers directly with the bank’s products, like an Apple store, guiding bank customers to connect with kiosks for transactions and saving personal interactions to answer questions and discuss a customer’s specific needs.

Upgraded and Innovative ATMs

ATMs were introduced back in 1967, a transformation for banking technology. Next-generation ATMs will feature contactless payments. Like Apple Pay (or Google Wallet), customers will have the ability to perform contactless ATM transactions with their smartphone.

In Asia and the Middle East, ATM innovations are accessible. Biometric Authentication is available in India while Iris Recognition is found at Qatar National Bank ATMs. These technologies can provide banks the required security by protecting ATMs. Because of the regulations that govern North American banks, it may take several more years to see ATM upgrades and other improvements for the U.S. Banking System.

Blockchain

Blockchain technology is transforming banking and financial services by decentralizing the financial operations from centralized authority via computer networks. Transactions are minimized inside encrypted packets (blocks), then added to of computer code (chain) and encrypted for cybersecurity.

Blockchain technology can dramatically improve multiple areas for banks. It is the premise of banking technologies such as bitcoin. According to the Wharton School of the University of Pennsylvania, it is no longer a question of if blockchain will change the banking industry, but when.

The Birth of “Non-Banks” Banks

Technology will allow banks to deliver a much faster, transparent customer experience. Many of their resources are committed to compliance and security. This has given “non-banks” (financial service providers that are not regulated by the banking industry), to thrive. These companies devote large amounts of assets to innovative financial technologies, enabling them to innovate much quicker than the traditional banks that attracting tech-savvy customers.

Automated Employees for Financial Services

According to Bloomberg, many employees at Wall Street’s biggest firms are considering other positions or conforming to cloud computing and machine learning that automate banking operations. With this in mind, up to 30 percent of banking positions could disappear by 2021 as a result of new technologies.

Strategic Partnerships in Banking and Financial services

Since banks putting large amounts of money into new technologies, the best and agile way to deliver innovation will require strategic partnerships. To enhance a banking customer’s experience, scaling companies that have the latest and greatest FinTech and social media platforms can be successful partners for traditional banks that are seeking to upgrade the customer experience.

Many credit card data analytics companies are partnering with financial institutions, like US Bank, to understand secure purchase data behaviors to tailor consumer marketing specific to the customer’s credit card use.

Innovation Needs to be a Banks #1 Priority

Technology innovation is moving customers from banks that don’t invest to banks that do. By investing in technologies and customer experiences are in sync with customers’ expectations. It will also streamline bank operations and deliver enhanced customer service. Innovate by delivering these new technologies to banking customers is the only way to survive. Banks must invest in these technologies today.

Read also: Winning the Race to Innovation in Banking Technology

Banking must make digital innovation their #1 priority to compete while regulations are constantly changing. Technology can increase their impact. Organizations must be aligned to support innovation that will resolve outdated business processes. Credit unions also need to foresee customer needs and innovate so they can deliver the most powerful combination of people, processes and technologies.

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