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How Technology Is Transforming Financial Institutions

by Olufisayo
Antrix Corporate Solutions Ltd
How Technology Is Transforming Financial Institutions

You landed a new job as a bank teller. You want a career in the banking industry.

You believe this job is a great entryway into higher-level positions. As the months go by, you excel at the position. Your manager speaks highly of you.

However, your manager calls a team meeting and conveys grave news. Branch management decided to close your bank location.

Why?

Because more customers are conducting financial transactions digitally instead of physically visiting the bank. The bank intends to close more branches around the region and focus on buffering online services.

You’re disheartened and out of a job. Where do you go from here?

This is a common story as banks adapt to the online world. Customers expect instant service in the age of Amazon and other giants who will deliver fast service with the click of a button.

Now, financial institutions are catching up and offering speedier service via ATMs, payment options, and deposits.

As the banking industry digitizes its services, you’ll see new jobs created in automation, advanced AI, and Big Data. This article will show you the convergence and technology and banking. Let’s explore.

Digital vs. Personal Interaction

Despite online transactions, many customers prefer person-to-person contact when it comes to certain services. For digitized service, customers can visit kiosks or use apps to get fast service.

And, chatbots will answer certain questions without the assistance of a human. Through an app or banking website, customers can conduct transactions, with no need to visit a physical branch.

However, complex customer service inquiries will still take place on a personal level.

When it comes to concerns and questions, many consumers don’t appreciate the distant interaction from an automated bot. But the banking sector will maintain a human touch going forward.

The Role of Automation

The human touch will still play a role among employees.  With the rise of automation comes the concern that more employees will lose their jobs. While this is a legitimate concern, the tech boom will create additional jobs within the banking industry.

For example, advanced AI will streamline workflows efficiently and provide vital directives for employees. In the future, an employee will most likely follow the instructions of an AI instead of a human.

This also means more jobs in the AI field. Engineers must create AI and write programming. And, humans must also train the AI to perform specific duties.

AI can also detect fraudulent activity or identity theft. They can also pinpoint irregular activity earlier and alert customers and banks accordingly.

In addition to directives, robots will engage in menial tasks, such as cutting and pasting data. Or, AI can read and interpret complex documents that can absorb hours of precious time.

Instead of eliminating jobs, the automation of mundane tasks can give employees more time to focus on important endeavors. Humans will always play a role in banking, as banks compete with other institutions.

Online Lending

With the rise of peer-to-peer lending and alternative loan companies, banks are finding ways to approve loan applications faster.

Credit unions are making the same adjustments. For more information on trends within the credit union industry, read this article by Austin Williams to see if a credit union is a right for you.

Also, banks will provide faster deposit methods for approved applications. An automated process will foster better customer service experience.

Data Goldmines

Borrowing activity is a vital piece of data that banks need to better understand customers. AI will also play a role sifting through the vast quantities of data collected from customers. This data can come in the following forms:

  • Buying habits
  • Social media behavior
  • Customer service experience

Banks want to use this data to create accurate profiles of their customers. More importantly, they want to understand why a customer closes an account. And, the banking industry wishes to reduce account closures and maintain customer satisfaction.

AI will help banking officials extract key pieces of data that allow them to course-correct where necessary. And, the data will help managers market their products and services to the right customers. Finding the right consumer demographics will also trim marketing expenses going forward.

Enhanced Privacy Protections

The finance industry has access to a wide array of data, but it will face more scrutiny and regulations. In the wake of mass data breaches across multiple sectors, regulators are instilling more restrictions on data use. Going forward, customers will have more control over their data.

The practice of sharing a customer’s data without his or her consent will be non-existent. This is especially true in Europe, where the European Union instituted General Data Protection Regulation (GDPR). The GDPR forces institutions to seek consent before sharing customer data.

Large and small banks will disclose which third-party entities are accessing customer data. And, the banks will reveal how the bank or vendor will use the data.

Biometric ATMs

Regulators have played a role in preventing biometric ATMs from reaching North America due to security concerns. And, many consumers aren’t comfortable with the idea of a machine scanning their eyeballs.

With that, these types of ATMs will reach North America in the coming years as officials further study the discipline.

Nations such as India and Japan already have biometric ATMs in place.

These kiosks will play a role in:

  • Reducing fraud
  • Preventing hacking
  • Stopping identify theft

Biometrics is one of the best ways to identify the account owner. Moreover, customers won’t have to remember pin codes that are easy to forget.

Soon, however, you’re more likely to see an ATM scanner that assesses the vein pattern of a finger. Or, customers can use smartphone chips instead of a bank card to conduct transactions.

Financial Institutions in the Coming Decades

Technology trends in the banking sector will provide larger roles for data and automation. Bank employees will see AI performing directive roles. And, robots will conduct manual tasks that will enhance workflows.

Small and large financial institutions are looking at technology trends to remain competitive. As a result, customers can expect faster service and more convenience.

Interested in learning more about money and finance? Read more of our blog to learn about the ins and outs of banking.

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