Top Banking Technologies
March 10, 2024

Bank Better: The Top Banking Tech to Keep Ahead of the Competition

Staying ahead of the curve is imperative for financial institutions. The following banking technologies offer a strategic advantage, not only in meeting customer expectations but also in driving operational efficiency and innovation. From intuitive user interfaces to the transformative power of AI, blockchain, and modern core banking systems, the possibilities are vast and promising.

Mobile Banking Apps: Great UI Makes Banking Easy and Creates Loyalty

Enhancing mobile banking apps and their user interfaces (UI) is critical for banks to provide superior user experiences, drive customer engagement, and stay competitive. An effective mobile banking app combines aesthetic appeal with functionality, ensuring that users can navigate smoothly and accomplish their banking needs effortlessly. Improvements such as simplified navigation, personalized dashboards that present users with relevant information and actions based on their banking habits, and seamless integration of advanced features like mobile check deposits and real-time notifications for transactions, exemplify a commitment to leveraging technology for a better customer experience.

A notable example of leveraging UI improvements for competitive advantage is a bank that implemented a feature allowing users to customize their app’s home screen. This customization capability enabled users to prioritize features they use most frequently, such as quickly transferring funds, viewing account balances, or accessing bill pay functionality, right from the home screen. Such personalization not only enhances the user’s experience by making it more relevant to their specific needs but also demonstrates the bank’s flexibility and innovation in meeting customer demands. This approach to mobile app design not only sets a bank apart from its competitors but also deepens customer loyalty by providing a distinctly convenient and user-centric banking experience.

AI and Machine Learning in Banking: Know Me and Anticipate My Needs

AI and machine learning (ML) are transforming the way services are personalized across various industries, offering insights that could be significantly beneficial for the banking sector. A state-of-the-art ML best practice from the healthcare industry, for example, involves using predictive analytics to personalize patient care plans. By analyzing vast amounts of data from patient records, wearable devices, and genetic information, healthcare providers can predict health risks and tailor preventative or treatment plans to individual patients. This approach not only improves patient outcomes but also enhances the efficiency and personalization of healthcare services.

Applying a similar strategy, banks can leverage AI and ML to analyze customer financial behaviors, transaction patterns, and external economic indicators to offer personalized financial advice, product recommendations, and risk management strategies. This application requires mastery of relevant customer data and likely a customer data platform or CRM system in which a gold copy of customer data can reside.

From there, by identifying spending patterns, a bank’s ML algorithm could anticipate a customer’s cash flow needs and automatically suggest setting up an overdraft protection or a short-term savings plan for upcoming expenditures. Additionally, banks could use AI to provide real-time, personalized investment advice by analyzing market trends, the customer’s financial portfolio, and risk tolerance, akin to the personalized care plans in healthcare. This level of personalization not only enhances customer satisfaction but also positions the bank as a proactive, trusted advisor in the customer’s financial wellbeing.

Blockchain Technology in Banking: Security, Transparency and Trust 

Blockchain technology has the ability and capacity to enhance security and transparency across various sectors, with the supply chain industry being a prime example. Here, blockchain has revolutionized the way transactions and workflows are monitored and verified, offering an immutable ledger that tracks the journey of products from manufacturer to consumer. This ensures authenticity, reduces fraud, and improves efficiency. An application of this in banking could dramatically enhance the security and transparency of financial transactions. By leveraging blockchain, banks can create a decentralized and tamper-proof ledger for recording transactions, ensuring that each transaction is encrypted and linked to the previous one, thereby making fraud or alterations nearly impossible.

Incorporating blockchain into banking could also revolutionize customer trust and satisfaction. For instance, in international remittances, blockchain can provide both senders and receivers with real-time tracking information, reducing the uncertainty and wait times associated with these transactions. Moreover, by using smart contracts, banks can automate the execution of agreements once predetermined conditions are met, without the need for intermediary verification. This not only speeds up transactions but also adds a layer of transparency, as all parties have access to the terms and the status of the contract. 

Embracing blockchain, therefore, positions banks as forward-thinking, secure, and customer-focused institutions, capable of delivering next-generation financial services with unmatched security and transparency.

Modern Core Banking Systems: Customer Experience and Efficiency

Modernizing core banking systems is pivotal for financial institutions aiming to improve customer experience (CX) and operational efficiency. A contemporary core system enables banks to be more agile, allowing for the quicker introduction of new products, services, and enhancements that meet today’s digital-first customer expectations. The transition to modern core systems facilitates better data management, integration capabilities, and real-time processing, which are essential for delivering personalized customer experiences.

One notable example of core system modernization is Santander UK, which embarked on a project to replace its legacy banking platform with a more modern infrastructure. This transformation aimed to streamline operations, reduce costs, and improve service delivery. As a result, Santander was able to offer its customers more reliable and faster services, including quicker account opening processes and real-time transactions. The move significantly enhanced the bank’s ability to respond to customer needs swiftly and efficiently, demonstrating the direct impact of core system modernization on customer satisfaction and loyalty.

Similarly, DBS Bank in Singapore underwent a comprehensive digital transformation, which included overhauling its core banking system. This allowed DBS to innovate faster, launching digital products that catered to the evolving needs of its customers. The bank introduced a digital wallet, PayLah!, which quickly became popular for its convenience and ease of use. The success of DBS’s digital initiatives, underpinned by its modern core banking system, has been recognized internationally, showcasing how such investments can enhance a bank’s competitive edge and customer experience.

In the United States, Capital One is another prime example of a bank that has fully embraced technology to reimagine banking. By moving its core banking operations to the cloud, Capital One enhanced its ability to utilize data analytics and AI, offering customers personalized banking experiences and recommendations. This transition not only improved the bank’s operational agility but also elevated the customer experience by providing more tailored and responsive services.

These case studies underscore the significance of modern core banking systems in transforming the customer experience. They have been executed by large banks but we are seeing more and more smaller banks that have, or expect to soon, address the challenges of modernizing their core.

Challenges and Approaches to Modernization

Replacing a core banking system represents a significant challenge for smaller banks and credit unions, mainly due to the costs, operational disruptions, and the complexity of migration projects. These institutions often operate with limited budgets and IT resources, making a core system overhaul a daunting task. Acknowledging these challenges is the first step toward addressing them. Mitigating them, both through sound implementation strategies and effective transition tactics is equally difficult.  Smaller banks and credit unions can explore phased approaches to modernization, starting with modular upgrades or adopting banking-as-a-service (BaaS) platforms that offer the flexibility to scale and add new functionalities without a complete system overhaul.

Another approach is partnering with fintech companies that specialize in providing modern banking solutions that can be integrated with existing systems. This collaboration can enable smaller banks to leverage advanced technologies like AI, blockchain, and cloud computing more swiftly and cost-effectively. Additionally, it’s crucial for these institutions to conduct thorough cost-benefit analyses and seek specialized consulting services when considering such significant transformations. By carefully planning and leveraging external expertise, smaller banks and credit unions can navigate the complexities of modernizing their core systems, ultimately enhancing their competitive edge and ability to deliver superior customer experiences. The challenge here is that surrounding the core with fintech edge solutions and point solutions can be equally costly and ultimately result in less agility and flexibility than a modern cloud-based core system can provide. The key is having a coherent well thought out strategy and a defined roadmap based on that strategy.  

Ready to transform your banking technology? Contact us for expert guidance and customized solutions that will enhance your bank’s operations and elevate customer experience. Let’s work together to keep your bank ahead of the competition in today’s dynamic digital landscape!

And be sure to explore our whitepaper for additional insights and strategies for achieving banking success.

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