Technology and competition are two forces reshaping the banking industry. Customers are demanding tech-first innovations and improved customer experiences, while competition from unexpected quarters continues to shake up the field.
Here are trends you should know about for 2020 and beyond:
Expansion of 5G wireless connectivity: The first 5G systems were deployed in 2019, and 2020 will see wider coverage and more data plans. 5G will expand the possibilities for Internet of Things connectivity, notes The Financial Brand, and improve both customer experience and bank infrastructure. Expect better virtual assistants and increased security and biometrics.
Tech and social media companies are getting into the business: A surprising range of non-banking companies are getting into the banking, or at least money movement, business. Google plans to offer checking accounts through Citigroup and the Stanford Federal Credit Union in a project seen as an extension of Google Pay. Meanwhile, Facebook announced last year a digital blockchain-based currency using Calibra, the social media giant’s digital wallet.
Fintech takes on consumer banking: FinTech companies like Stripe, Ripple, Coinbase, and Robinhood are continuing their move into the traditional consumer banking field, promising better customer service thanks to 24/7 access and solutions like loans for those with poor or no credit and peer-to-peer marketplaces for customers who can’t secure traditional loans.
Blockchain technology will continue its slow expansion into banking: Regulations, scalability, and interoperability have hampered the quick introduction of blockchain security technology into banking, though that is changing. Its continued expansion will require data collaboration and trust between different organizations, although it has the overall ability to improve trust, provide transparency, and even lower costs, reduce transaction times, and improve cash flow.
Cloud technology is migrating from the public and private cloud to a distributed cloud. No surprise here—most if not all banks use cloud technology for data storage and transfer. But what is changing is the type of cloud. The “distributed cloud” sends public cloud services to external locations while keeping the original owner as the party responsible for cloud service architecture, delivery, updates, and operations.
Expect expanded artificial intelligence deployments: Aided by advancements in connectivity such as 5G, artificial intelligence is edging deeper into banking. AI will improve customer experiences and offer seamless transitions to improve satisfaction and increase relationship value. AI will also help with anti-fraud efforts such as know-your-customer regulatory checks and fraud detection as well as credit underwriting.
Voice banking: it will become a thing: Voice engagement will enter the banking lexicon thanks to the proliferation of smart speakers. Consumers already use voice for a wide variety of research and convenience features, and this year it will move into the banking sphere. Traditional banks should watch out: as tech companies like Google move into banking, they will be best poised to offer voice-based banking.