Open Banking or FedNow: Where to Start?
September 14, 2023 | 2 min read
The banking industry, like many other industries, is poised to experience unprecedented change as it moves towards a digital industry. While most bankers have already begun to embrace a digital landscape, there is still a lot of challenge to come. The future of banking will include a number of new ideas and methods for accomplishing tasks on a grander scale. And, perhaps most importantly, the customer will be at the forefront of that change. Today’s average banking consumer expects more, demands it faster, and expects better results. Banks unable to compete with those meeting these demands will likely struggle to remain viable in the long term.
As a followup to our previous post about the biggest challenge facing banks, here are three more critical challenges to consider:
But, what are those challenges? You’ve heard of many of the banking trends of 2018 already. Some of them include providing a multi-channel experience for the consumer and providing more on-the-go services. Onesurveyfound that 61% of organizations will need to put more focus on removing friction from the customer’s journey as a leading concern. And, then there are the changes coming from within. There’s undoubtedly more competition in this sector than previously. And, cost pressures will continue to put pressure on banks to find more affordable ways to accomplish tasks, often with fewer labor hours spent. Reducing risks on investments in an increasingly volatile world will not be easy.
Look beyond, this, though, to see the other changes playing out. These are three key challenges banks will face in 2018. Whether or not your bank is ready depends on your ability to innovate, customize, and integrate any of these key areas of focus.
One of the key concerns for any bank is maintaining customers. One challenge that banks will need to overcome, then, is remaining relevant as new challenger banks begin to rise. The best way to be able to overcome this challenge is to provide the most innovative and hands-on service to customers. Even the Millennial will remain with the bank that meets their needs and is always available to them. This will include creating that frictionless environment that consumers need.
To achieve this, banks will need to employ more artificial intelligence in their customer-sided efforts. For example, the use of AI chatbots that can interact with and provide information to consumers immediately – even in the middle of the night – will be a key factor towards success. It also means utilizing touchpoints that most banks are unfamiliar with such as Facebook. It’s possible, for example, to connect with would-be customers or current customers through Facebook chatbots, solving their problems instantly.
Virtual assistance will be important for most banks, including those who are working to develop a mobile platform. Some banks are working to develop an intelligent virtual assistant. These assistants can work much like a chatbot in that they can answer questions. But they can also help consumers to avoid problems. For example, some can help to anticipate the future needs of the customer. This can help the customer to move closer to achieving financial goals. This type of smart interaction can only happen with a well-defined and integrated platform.
Today’s bank still is an investment powerhouse and the demand to earn more with less risk is growing. One of the ways banks can do this is by having more predictive and analytical tools at their fingertips. Being able to predict the needs of customers, investment strategies, and even in-house needs will help empower banks to do more with less.
With cryptocurrency becoming a bigger role player in the financial lives of individuals, banks will need to have more ability to move quickly and prevent fraud. It will also be important to use machine-based learning to very quickly gather data, analyze it, and create solutions to problems on the go. This can reduce risks related to fraud.
At the same time, banks are turning to more digital tools to give them insight into the decisions they make. Consumers looking for a startup loan, for example, don’t want to wait days for an answer. With this type of high-powered artificial intelligence available to them, they can gather data and use it to make decisions based on risks immediately.
It is a combination of all of these areas that will ultimately enhance or limit the success of today’s banks. Digital innovation is one component of this. Artificial intelligence and virtual reality are another. The key piece holding it all together is the desire to innovate to meet the customer’s ongoing demands.
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