Top digital trends transforming the banking industry in 2021
We live in the age of technological advancement where digital transformation has become an inevitable part of modern business strategy. All the industries across the world are adapting digitization for an efficient and seamless experience, the banking sector is no exception. Banks have leveraged the benefits of digitization to offer uninterrupted, efficient, flexible, and convenient services. The digital trend will strengthen the banking sector and reshape its operational structure for better.
The COVID-19 pandemic, which has restricted the movement of people across the globe, has encouraged banks to make huge investments in digital initiatives. Customers are turning towards digital platforms to curb contamination and utilize the best of technology. Furthermore, the advancement which was still in the pilot stage made their appearance much sooner than expected, giving rise to the massive transformation in digital banking.
Top digital trends of banking sector 2021
In modern times, banks are embracing digital trends to uncover the wide array of possibilities they offer. Digital-driven operating models are preferred by banks to improve customer experience, implement new government regulation, align with the latest compliance mandates, increase security, and offer a better working experience for the employees. Such digital transformation provides great opportunities for organizations to adopt an efficient, agile, and secure system.
The top digital trends of 2021 include:
Digital banking: With the increasing threat of the rapidly spreading virus and a higher risk of contamination, cash has become the least preferred transaction method in the current scenario. This has led to a new revolution in digital payments across the globe. Digital payment methods have witnessed a spike in the last few months. It has been reported that the number of people preferring cash transaction has reduced while contactless payments have shown an increase of up to 40%. People are moving towards a new trend of digitization which will continue even after the pandemic era is over, changing the entire game of the banking and economic exchange ecosystem hereafter.
AI-integration: The integration of AI-bots is a revolution in the banking sector. With the crucial financial figures involved in the banking systems, there is no room for any error. With AI integration being used in the testing of banking software, an error-free output becomes inevitable. AI-bots are also used for customer service as they work around the clock to offer 24/7 support, which is otherwise not possible.
In the next few years, the AI evolution will reach more advanced levels. Banks are already working on and released a few systems on predictive personalization which are AI-driven. This uses AI to leverage data and advanced analytics to offer real-time financial recommendations, optimize risk metrics, intelligent decision making, improve security, and a lot more.
Cloud computing: With the greater scalability and stability Cloud offers, banks are slowly migrating their core operations to Cloud. The number of banks embracing Cloud strategy is increasing exponentially, this is a part of their operational plan to drive efficient digital transformation.
From the beginning of 2020, banks are exploring new horizons with Cloud. It is a more feasible option for the greater flexibility and convenience it offers, yet it is affordable than the traditional servers. Currently, banks are migrating to hybrid Clouds for security reasons; there is ongoing research to check the feasibility and security of public Clouds.
Automation: Banking processes usually deal with data that are highly sensitive and huge volume and involves processes that are mundane and repetitive. Hence, automation is the perfect solution for banks to achieve scalable, stable, and responsive results for greater accuracy and consistency.
The most crucial automation is software testing which plays a critical role in the modern software development cycle. It involves an end-to-end process that will detect any error or defect in the system and ensure to present a flawlessly working system. Automation helps in identifying errors, reduce risk, cost-saving, improved customer engagement and so on. Test automation is usually performed with a tool, one such popular test automation platform in the BFSI industry is Tenjin. It is a banking-specific test automation tool offering testing services exclusively to banking and financial software.
Privacy and security: As most of the banking processes are moving to virtual platforms, there is immense pressure on organizations to maintain a strong security system that is resilient to any kind of cyberthreats or breaches.
In 2021, as the number of online users has drastically increased, banks are looking to create highly secured systems that will be nearly impossible to breach. In the coming years, cybersecurity and data privacy will be the key USP for banks and financial companies.
The future of digitalization in banking
The introduction of digitization has changed the way banks operate. The banking sector is predicted to witness a lot more technological advancements which will further transform the operational structure. With the continual advancement at the technological front, the scope of digitization looks more prominent and promising.
With the ever-increasing benefits of digitization, banks are investing more on the digital front like never before. According to a survey, it was estimated that the global banking sector invested nearly $10 billion to digitize the front office alone in the year 2018. At this pace, digitization has a strong future that will not fade away anytime soon.
