Across the economy — in sectors like health care, manufacturing and education — Big Tech companies and startups are developing digital tools that will likely transform how businesses approach their work.
The financial sector has joined the digital transformation trend as well by developing or adopting new banking technologies. In these five ways, banks are upgrading their fintech to adapt to an increasingly digital economy.
Artificial intelligence (AI) is key technology for the financial industry right now. Fintech companies are constantly working to find new ways that can be applied to the industry.
AI approaches are most useful in helping banks tackle massive data sets, which can be difficult to analyze with conventional methods. For example, TD Bank is using AI and big data to predict customer needs and create a more powerful recommendation engine.
The sharing economy is made up of apps and other technology that enable individuals to quickly connect with contractors who can provide services, like rideshare or food delivery.
Traditional banks still dominate the industry, and it's likely to stay that way due to the consumer trust in these institutions. However, fintech businesses have begun developing new technology that will bring the financial world closer to the sharing economy. Mobile wallets, for example, and insurance tech apps that offer users incentives for meeting health goals are two ways that the fintech world has innovated to take advantage of the sharing economy
Banks, in response, are also innovating. By using data from other companies to inform credit decisions or offering transaction support in these apps, they're adapting to this increasingly distributed world of financial transactions.
Customer intelligence tech — which helps companies predict or evaluate what their customers want and need — is quickly becoming critical for the financial industry. New platforms that allow banks and other institutions to promptly share data or manage app traffic can increase their focus on customer experience. Improving CX and reducing friction in banking can help build stronger relationships with customers and secure a bank's place in the market.
The adoption of this tech will be further driven by the increased importance of roles like relationship managers.
As it becomes easier to track customer experience and sentiment, fintech companies and major financial institutions are likely to invest more in this kind of technology.
The use of the blockchain is on the rise in the financial sector.
Here, the tech is primarily being used to improve the transparency of transactions and help establish trust between unrelated entities. Because the blockchain can provide multiple parties with a trustworthy ledger of transactions — including data like credit histories and asset provenance — it can reduce the risk of certain transactions.
At the same time, banks are also becoming increasingly interested in offering support for cryptocurrencies. Mastercard, for example, announced a new card in June 2020 that converts bitcoin to cash at the point of sale.
For the moment, however, banks remain cautious of cryptocurrencies. Despite the size of the crypto market, these currencies are unstable and risky in ways that large financial institutions don't seem willing to deal with just yet. This may change over the coming decade, but blockchain will likely have a bigger impact on the sector first.
Fintech enables banks to improve customer experience and offer new services — like transactions backed by the blockchain. Over the next few years, financial institutions will likely continue to invest in technology that helps them predict and respond to customer needs.
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