Most banks began their digital journeys to a more efficient business model some years ago. But, the pace of innovation and disruption is now much more dynamic. Technology, regulatory requirements, evolving customer expectations, demographics and new competitors are shaping the banking industry. We believe 2020 will be a tipping point for digital transformation in banking.
Banks are becoming more customer experience driven and focused on optimizing the customer journey across multiple touchpoints. Digital technologies are boosting banks' unique potential to unlock more meaningful customer relationships and create new business growth opportunities. And, with improved data insight, they are better placed to anticipate what customers want and transform the way they interact and engage with them.
According to the PwC Retail Banking 2020: Evolution or Revolution report, 61% of bank executives say that a customer-centric business model is 'very important'. The vast majority (75%) are already making investments in this area. Yet, only 17% feel 'very prepared' to deal with the combined powerful forces of changing customer expectations, regulatory requirements and new market entrants.
Most banks don't have to be convinced of the need for digital transformation. They're all doing it at some level. But, the winners in the 2020s will be those banks who leverage the latest digital transformation trends to create stronger and more lasting customer connections.
Here are 10 digital transformation technology trends that will help banks get ahead in 2020.
1. Voice Banking
Voice Banking will increase significantly, as customers become comfortable conversing with digital assistants such as Alexa and Siri. But, as technology improves, customers will expect their voice banking transactions to be a seamless cross-channel experience. That means natural, contextual conversation, flowing from one banking channel to another in real-time.
VeriPark's omni-channel delivery solution, VeriChannel, does this and offers voice banking to customers who don't have access to devices such as Alexa or Siri. By using LUIS, Microsoft's machine learning-based service, VeriChannel eliminates the need to be connected to an additional device. It means customers can make transactions, such as payments, using voice commands only, without a single click.
2. Augmented Reality (AR) Banking
It's early days for AR banking but the technology is developing rapidly. Indeed, AR banking capabilities, such as money transfer with face recognition, ATM Locator and card details, are already available on VeriPark's VeriChannel mobile framework. This is making it easier for customers to track their spending and make payments and we anticipate many exciting customer experience developments in the future.
We will see AR being used for mortgage and loan approvals for instance, where a simple scan of a property will provide essential information such as borrower, lender and loan amount to bank employees, hence reducing mortgage processing and servicing time.
3. Artificial Intelligence (AI)
AI-driven Next Best Action (NBA) software is enabling banks to deliver more personalized offers and services to customers. With useful information, such as complete transaction histories, branch and call center teams can give appropriate and timely customer advice. Predictive analytics also means customer service teams and Relationship Managers can make the most of cross-selling and up-selling opportunities with tailored product offers. More banks will adopt this technology in 2020.
4. Biometrics and Face recognition
Currently, facial recognition technology is mainly used for security and identification purposes. For example, it can help banks carry out Know Your Customer (KYC) verifications quickly and easily and confirm customer identity during digital onboarding. Soon, we'll witness more banks using face recognition technology to interact with their customers. It'll eliminate the need for a physical bank card and PIN.
5. Watch Banking
Watch banking works in a similar way to mobile banking, but without the need to pull your phone out of your pocket. Research suggests that with 5G rollout, consumer uptake of smartwatches will soar to around 115 million by 2022 – up from just 42 million in 2017. Gartner predicts watch banking will grow faster than online or mobile banking over the next few years, mainly because customers will delight in the ease and convenience of making transactions – and even benefitting from geo-location based third party offers – on the move.
6. Video Banking
As customers use video calls for everything from work meetings with remote-based colleagues to consultations with their doctor, they'll also expect to connect with their banking adviser via video rather than trekking to the branch. Frictionless integration with your CRM system allows for an engaging experience that resolves queries quickly and helps build stronger customer relationships. This face-to-face interaction will also facilitate customer verification and document sharing during digital onboarding.
7. Chat-based banking services
Conversational Chatbots are already being used for many banking transactions and day-to-day customer service queries. We expect usage to increase as improved Natural Language Programming (NLP) and Machine Learning (ML) provides two-way human-like communications. This will reduce costs, allow skilled banking personnel to focus on more complex customer interactions and provide actionable customer insight data to boost customer experience, and cross-selling and up-selling opportunities.
We also expect WhatsApp Banking to become more popular. With a seamless connection to your CRM system and a single customer view (SCV), customers can interact with their bank and make transactions 24/7 via WhatsApp. This makes banking as easy as chatting with friends.
8. Open API Platforms
Open Banking has the potential to revolutionize how customers manage their money. For banks, integrating content, data and functionality creates endless opportunities for services tailored to an individual customer's behavior and lifestyle. App development and maintenance costs will also lower as legacy systems can be re-purposed into an omni-channel solution with a new presentation layer, rather than developing a new system from scratch.
9. Robotic Process Automation (RPA)
RPA is taking burdensome manual tasks from employees' shoulders and allowing them to devote more time to higher-value tasks. We believe RPA is not just here to stay but set to grow. As it becomes more sophisticated and AI-enriched, RPA will also play a vital role in more complicated processes, such as loan origination, fraud detection and digital onboarding.
Together with UiPath, VeriPark provides the capability to speed up complex processes, clear administrative bottlenecks and minimize human intervention and errors. As a global ISV (independent software vendor), we are also excited to see the opportunities from Microsoft. Their recently announced RPA capability, Microsoft Power Automate UI Flow, is an end-to-end automation platform capable of reinventing a wide range of processes and workflows across the financial services industry.
10. Cloud Computing
The cloud is proving to be a superior option to boost capacity to handle data that provides a high level of agility, security and scalability. For use cases such as customer data analytics, batch processing and data storage, banks can access the cloud as and when required, which means they can utilize such resources more flexibly and efficiently. Its pay-as-you-go pricing means banks and other financial institutions can control costs and become more agile. Although the cloud computing adoption rate is still rather low in the banking industry, it is clear that some banks are already moving heavily into this new technology.
In summary, digital transformation is a journey or iterative process, not a single destination. Banks have already taken their first steps. But, 2020 is the time to accelerate the next steps or revisit those you may have missed.
Would you like to find out more about where your digital transformation journey could take you? If so, get in touch with us!