Artificial Intelligence, cloud computing, Oracle Flexcube, APIs, and cyber security have a lot to do with the success of financial institutions. The most recent technologies have made various use cases possible, from helping companies enhance the customer experience to launching new goods and services.
The fast growth of digital banking, the greater emphasis on innovation and newer technology, and the quickly shifting ecosystem of business are all challenges that the banking industry must address, but they also provide several possibilities. Every financial institution should strive to build innovative business models, leverage cutting-edge technology, and become a customer-focused company as they enter the new year.
Top eight retail banking trends and predictions for 2022
1. Moving to the cloud
Cloud computing has yet to be adopted by most banks and other financial organizations. Why? In light of the widespread concern about data privacy, security, and governance. According to an IBM Banking study, only 9% of key banking workloads have been moved to the cloud.
Boosting the speed and scalability of banks’ operations is also a top priority for the industry. Cloud computing technologies, such as Oracle Flexcube 14.x should be used by banks and other financial organizations without a doubt. In addition to improving consumer insights and creativity, moving all of a bank’s core workloads to the cloud reduces security and business continuity concerns.
It is also possible to boost the productivity of workers by using cloud solutions, as well as get insights that may have a wide-ranging influence. More than two-thirds of companies claim they’ve seen an increase in efficiency within the first three months of using new technology. Customers are often let down by the outdated technology used by most financial institutions. Keeping it up-to-date is not only time-consuming and expensive, but it also performs poorly. Moving to the cloud is the greatest answer for banks looking for flexible solutions that can be scaled at any time. This technology may be used by smaller banks as well as major ones to get an advantage over the competition.
2. Intelligent Process Automation (IPA)
Robotic process automation, cognitive automation, computer vision, and machine learning are all examples of IPA applications. Implementing IPA may add $512 billion to worldwide profits for the financial services sector, according to industry experts.
Many banking services can be automated using IPA, such as commercial lending and trade finance, letter of credit and guarantee transactions, and anti-money laundering and sanctions screening. Also included in the list of IPA-supported services are cash management operations, import and export payments, automated payment operations, and payment investigations.
Even though the advantages of intelligent automation are evident, many financial organizations are unsure about how to get started. It’s critical to start small while implementing IPA and focus on the value that each process will provide to the bank once it’s deployed across many platforms.
It’s tough to deliver good customer service if your back office isn’t extremely digital. If we can automate all of the above, it will have a profound impact on how clients see their bank.
Banks should use intelligent process automation to back up robotic process automation. Most financial organizations will be looking to use IPA in 2022 as a method to improve client service.
3. Embedded Banking
Embedded banking, or embedded finance, is the incorporation of financial services into an otherwise non-financial service. Embedded banking, on the other hand, connects the dots between financial services and end-users. Faster and easier access to financial services is made possible.
Embedded banking has been emerging in the past several years and is becoming more popular. US income from it is estimated to reach $230 billion by 2025. According to estimates, it will be valued at $3.6 trillion by the year 2030.
An OpenPayd poll found that 70% of companies want to deploy integrated financial services in the next two years. Your options in embedded finance are almost limitless; how do you decide which one to use? When selecting an embedded financial solution, keep the requirements of the consumer in mind at all times throughout the process.
Embedded financial services are in high demand from a wide range of companies, large and small. However, although some financial institutions see it as a danger, others see it as an opportunity.
When it comes to integrated financial services, users want to remain inside an app throughout every step of the purchasing process. Either in a joint venture, a purchase or a license should be considered when implementing an embedded financial system. As a result, banks and other financial organizations stand to benefit from this situation.
4. Cost transformation
Pandemic-related shutdowns have caused financial institutions to rethink their expenditures and spending plans. Most firms saw a significant drop in profitability as COVID-19-related costs rose. There was still a lot of pressure on banks in 2021. Poor interest rates, low loan demand, and restricted fee revenue options pushed banks to look for methods to cut expenses.
Cost-cutting measures are unavoidable as banks strive to return to normalcy. Investing in digital transformation is essential for banks in order to compete in today’s digital world. Future digital transformation was intended to allow a remote workforce and to ensure company continuity in 2020. Banks, on the other hand, are now more concerned with promoting innovation.
Some of the activities undertaken by financial institutions to reduce their costs include simplifying existing legacy IT systems, consolidating core platforms for better operations, reducing spending on contractors, offloading non-core businesses, digitalizing more services, and reducing office space.
5. Banking-as-a-service approach (BaaS)
“Banking-as-a-service” is a term for providing complete financial services over the internet. Banking as a Service (BaaS) is the integration of licensed banks’ digital banking services with non-banking businesses’ offerings. Digital banking services, such as loan payment services, mobile payment cards, debit cards, and so on, can be offered by an ecommerce website that does not even need a banking license.
It is possible for banks to make more money by adopting the BaaS ecosystem. A bank’s goal is not just to reduce costs but also to generate new income sources.
With the support of BaaS, traditional banks may also develop new business streams. Using these approaches, banks are able to make money out of their whole banking infrastructure, including their capabilities, data, and systems. Banks may boost their bottom lines by using BaaS via revenue-sharing agreements, one-time payments, subscription fees, and more.
Obtaining a banking license is a difficult task in and of itself, much less with the many regulatory requirements that must be met. When it comes to partnering with banks, non-banking service companies are more than willing to do so.
Conclusion
To stay relevant in today’s world, banks should continually be on the lookout for new technology and procedures for Flexcube implementation that may help them adapt to the changing landscape. For financial institutions, recent months have been a wonderful lesson in using technology, and now is the moment for banks to be more creative.