Technology

Digital banking must now go well beyond the plain capabilities of displaying account credits and debits. In the digital age, customers expect their primary mode of engagement with banks to be digital, including a full set of value-added services. In addition to these new customer expectations, rising financial services regulations such as DORA (Digital Operational Resilience Act)

There is no doubting that the banking industry and financial services as a whole are evolving at a rapid pace as the speed of technological innovation accelerates. Neobanks and fintechs, who are functioning on forward-looking technology stacks without the burden of legacy infrastructure, are eating up the market share of legacy players.

More than 3 billion people in the world play video games, according to Statista, and this trend has led to the growing popularity of gamification business models in banking. Gamification is forecasted to increase at a compound annual growth rate of 26.5% through 2027, and companies that adopt it see up to a 700% increase in conversion rates.

With the pandemic changing how we invest and financial firms keen to digitalise further, robo-advisory has taken off. Although 2022 has witnessed affluent investors returning to traditional wealth-management channels, the impacts of COVID and financial-sector digitalisation are expected to sustain significant growth in robo-advisory.

Banks and financial institutions are among the most regulated organisations in the free world and are encouraged to take the question of risk extremely seriously. This precautionary principle extends to IT architectures where the notion of “if it ain’t broke, don’t fix it” holds sway. Change equates to risk and risk is something banks need to manage carefully.

Asia has led the rest of the world in developing the super-app, which offers its users a single interface to perform an increasingly diverse range of ordinary tasks in daily life. Will such apps prove as popular in the West? By providing a growing list of essential financial services, what impact will super-apps have on traditional banks?

The Fed and the US government are making more noise over the potential creation of a central bank digital currency. Unlike cryptocurrency, a digital dollar would be legal tender and need to meet policy objectives. Congressional approval would be required, which might be tricky given the privacy concerns associated with digital currency.

Banking has gone digital. At last count, roughly 203 million consumers currently use some form of digital banking in the United States alone, up from 196.8 million in 2021. That number is projected to grow over the next three years to a total of 216.8 million. Because of this and the accelerated pace of technological innovation, banks, credit unions, and other financial institutions require a digital presence more than ever before — and not just an informational website about your available financial products and services.

In their efforts to generate alpha on investments, asset managers are increasingly investing in technologies such as artificial intelligence and machine learning to give them a competitive edge. But do they really attain an enduring advantage? Or does their long-term success hinge on the continued provision of excellent, tailored service?

Few ecosystems have changed as drastically in as short a time as the payment industry. A decade ago, most payments worldwide were made in cash. Today, digital payments dominate, a transition expedited by the pandemic. Three payment trends deserve special attention: digital wallets; buy now, pay later; and central bank digital currencies.