What does the future of banking look like? It’s a fun question to ask, but it’s also an important one. Banking is one of the most profitable businesses in the world, and banks have been innovating and expanding for decades. But now that technology has taken over our lives, it seems inevitable that the banking sector will undergo a series of drastic changes. Here are 5 crucial developments in fintech that will shape the future of banking.
1. Mobile banking
Mobile banking is the most efficient way to make a payment or transfer money. This method uses your phone or tablet to perform banking tasks that would otherwise take you several steps to accomplish. Your mobile device does all the work. All you have to do is enter your card and amount. In the not-too-distant future, financial service companies will use virtual assistants like Alexa, Siri, and Google to give their customers instant answers and guidance. These AI-powered assistants will make it easier to shop, pay bills, and get answers to other pressing financial needs.
2. Artificial intelligence
Artificial intelligence is a term that is constantly being used by industry analysts and companies as a catch-all for various technologies. But, in many cases, the term gets thrown around too broadly. When talking about AI, we usually talk about deep learning, computer vision, or predictive analytics. These terms may be new, but these technologies are really just algorithms that have already been around for a long time, such as search engines and machine learning programs. But AI is even more fundamental than all of these things put together. AI algorithms are trained by reading millions of user-written instructions and then outputting this data in response to a question. This seems pretty elementary, but it’s actually the first step in learning how to think like a human.
3. Blockchain technology
One technology that has been making waves across the financial services sector is blockchain. But what is blockchain technology? Blockchain is essentially a shared digital ledger, the transfer of data through an open network of users and computers. Originally developed to support bitcoin, blockchain has been adopted as a means to store, transfer and trade just about any type of data. Indeed, blockchain technology is being used to make credit card payments through the ethereum network, digitize gold in an effort to cut costs, and preserve data about refugees. But the technology could change how banks operate in the future. Blockchain is essentially an improved version of the electronic money system known as fiat currency.
4. Digital currencies
It’s possible that the world’s first mainstream digital currency could be launched in just 2-3 years, according to Victor Lee, senior research director at the Mercator Advisory Group. He explains: “Central bankers are convinced that the advent of digital currencies could cause significant disruption to the financial system, and in particular to the traditional payment systems.” Moreover, the prospect of a more ubiquitous digital currency has caught the imagination of financial technology companies that are experimenting with new protocols and use cases for digital currencies. When they mature, digital currencies could be a game changer for a broad range of financial transactions and become a highly relevant technology that changes the way that people send and receive money.
5. Open banking
Though a recently initiated policy, the government-backed Open Banking initiative is aimed at standardizing the banking industry and making it more competitive, especially for companies that work outside of the traditional banking system. Open Banking isn’t just about making banking easier. It also allows businesses to more efficiently utilize existing data. If you use an online bank and its standard policy dictates that you keep financial details private, you have to be very careful when providing account information. But with Open Banking, businesses can tap into a vast database of transactions and know what you bought, where you went, and how much money you owe. And thats how you’ll tap into future of banking.