The FINANCIAL -- Fully digital banks without real departments and employees in the office – here’s how fintech expert picture the future of banking. How does the banking industry plan to get rid of money and what should be changed in people’s daily life?
More than 2,000 bank branches were closed in the US in 2017. Some of them are shut for financial reasons; however, digitalization of the banking sphere has also contributed to this number.
To reduce the number of onsite offices in favor of digital ones, banks should address a range of technological issues. For example, provide 24/7 client access to their banks from anywhere globally. That said, banks should ensure reliable remote authentication and personal data protection, as well as the office apps for connected work of employees and clients.
As a result of branch closures, the number of employees will drop. However, this is not the main reason. Banks and fintech institutions have become the key platform to run in various trendy and useful technologies. In the long run, they encourage clients’ self-sufficiency (self-service), implementation of virtual assistants and AI-powered chatbots and contribute to the development of CRM systems and big data-driven business analysis. Thus, clients will be able to create complex banking products by themselves in self-service mode. The same with reports and analytics. In case a client needs some help, they may turn (and are already turning) to machine-learned chat-bots. Large banks across the world invest their hopes with chatbots. KPMG introduces a revolutionary solution for virtual assistant called EVA (Enlightened Virtual Assistant). It is based on the leading analytical tools, voice authentication, artificial intelligence, API, and cloud technologies.
Even today, banking processes are getting simpler. The main reason for that is the abandonment of fiat money in favor of cryptocurrency and blockchain. Banks may need years to bring this idea to life, thus simplifying clients’ verification, transactions, and any other operations with liquid assets.
As a result, blockchain technology will help us to verify assets trustworthiness using distributed databases of signed transaction blocks with collective verification. Blockchain-based smart contracts allow making verified transaction simpler and at a lower cost.
Some banks are already implementing this experience. Barclays has made their first trade transaction with Israeli startup using blockchain. As a rule, such agreements require complex doсument flow which includes delivery of confidential papers and may take about 30 days. With blockchain, the transaction was complete in 4 hours.
Another change that comes with simplified transactions: banks and fintech organizations will communicate with IoT devices, the number of which will reach 50 billion by 2025. Sure, it will be a human who gives authority to these devices but here’s where their interaction with banks ends.
The role of financial institutions has never been limited to the transactions. It’s way more extensive. What is more, the act of transaction may make a customer feel irritated. In fact, clients want to have their banks as a strategic partner who helps them to plan their life and get satisfied when these plans turn into reality. That’s why it’s reasonable to leave transaction part to the Internet of things. Let them select utility pricing plans, pay for your bills and do whatever your authorize them to.
New system architecture
The bottom line is this: no matter who the bank clients are, humans or machines, their number will rise over years and their processing will require technological innovation. Today, progressive banks are actively adopting new financial technological solutions. New technologies will lower the time to market and reduce the cost of banking services with the help of automation tools, such as cloud technologies, microservice architecture, blockchain and collective cybersecurity.