Technology that helps improve the operational efficiency of banks is quickly changing the market. Banks have always relied on technology, but there’s a growing acceleration of tech adoption and innovation focusing on internal processes and customer experience.
The COVID-19 pandemic has contributed to these trends in a great measure since consumers started understanding the value of using digital banking services. Now the whole industry needs to adjust according to their needs and provide a seamless experience while improving workflows and securing customer data.
Digitalization has changed how customers interact with businesses, including financial services. The shift in banking was slower, but now many exclusively digital fintech companies focus on millennials and Gen Zers. How is this change happening, and what technologies are banks using? Let’s find out.
Banks are looking to modernize their legacy systems and, if possible, migrate them into cloud environments. That is the only way banks can maximize their digital potential. The foundation is essential, and many banks focus on adding new capabilities outside the core systems.
However, that won’t let those banks sustain themselves long-term. Companies need innovative approaches and proper core system maintenance to get the most value from legacy systems. Reviving these fundamental systems isn’t easy, but companies are making steps using newer DevOps solutions.
Improved regulatory compliance with automation and software
Regulators are stricter than ever about transparency, and financial institutions that generate, gather, and manage data must do it properly. Computing, analyzing, and compiling are only possible with multiple applications and tech solutions.
As regulatory pressures intensify, compliance requirements are putting a lot of strain on banks. That leads to a lot of compliance risk and potential regulatory fines. Digitalization is the answer, and companies are using cost-effective, scalable, and sustainable solutions like JFrog to modernize software use and production while ensuring consistent practices that follow requirements.
On the other hand, companies are increasingly using compliance tools that leverage machine learning and AI capabilities to solve compliance issues. Using extensive data with expertise allows companies to detect problems before they happen.
P2P payments are growing
Even though only around 15% of banks use real-time payments, approximately 30% of financial institutions are expected to launch in 2022. Financial institutions are looking for faster payment options, and P2P is the best program.
One of the reasons so many banks have turned towards P2P payments is the success of “CHUCK,” an open payment network with instant transactions. With this platform, users can send money from banking apps while allowing recipients to choose where they want the transaction to lend.
Banks can provide instant payment without closing customers within their network. Customers want to make payments cross-platform and avoid calculations associated with those payments. That leads to a diverse yet uniform payment system available to everyone.
Cyberattacks are sophisticated and come in many different forms. There have been several significant breaches that cost financial institutions a lot of money. Many online payment methods and technologies like blockchain primarily fuel that.
All of these solutions present their vulnerabilities. Since banks haven’t used them until recently, there’s no actual knowledge about the extent of these vulnerabilities. Companies are using the “zero trust” method, assuming that none of the networks, devices, workloads, or users can be trusted.
Too many access points have made it impossible to keep track of all the actions. The financial sector uses various validation solutions to track variables like location, device, and user identity. With zero-trust architecture, banks can gain the trust of their customers and safeguard their data.
Legacy systems rely on human decisions in a siloed environment. The appearance of new data-driven capabilities like machine learning, artificial intelligence, and cloud computing is trying to create environments in which data is available to all divisions and allows for seamless distribution.
Many banks are developing solutions that can distribute data from end to end. These organizations use disrupted data architecture, cloud-based storage, data capture capabilities, and advanced analytics fueled by machine learning and AI.
The ultimate goal of this kind of tech chain is to enable banks to connect all the dots and make automated, real-time decisions at scale to speed up their processes and get valuable insights.
Banks need the courage to adapt to the digital age. Even though that isn’t an easy task, the whole industry is taking significant steps.
However, as much as the financial sector needs to introduce new solutions, it also must have a cautious approach to form an efficient and cost-effective infrastructure. In other words, poorly-executed tech systems can only confuse and lead to errors.