Banks: institutions no one fully understands and everyone hates. Virtually everyone has at some point been a customer of these organizations. Some people were even clients before they were born, with many parents rushing to the closest local branch as soon as the fear of future university expenses took over the joy of becoming a new parent.
However, in recent years and in great part thanks to the ongoing tech revolution, banks have had to adapt their ways to ensure they still fit in the modern world. They’re still adjusting to the new reality, but what are the main changes and challenges the banking sector will have to deal with in the near future?
Although a buzzword at the moment, blockchain is simply a distributed ledger technology. It allows different parties to access the same data at the same time, which also guarantees the integrity of the database.
Blockchain technology has the potential to streamline customer transactions without the need for intermediaries. For example, if you want to transfer money from your account in the Philippines to another in Malta, the transfer will take days to be processed because of all the different agents involved. With blockchain, this could happen in a matter of minutes. It is one of the many reasons banks see the potential in this technology.
Apart from simple transfers, there are many other areas in which blockchain could further help the banking sector; from rethinking the very nature of loans to more simple ways to invest, blockchain will surely shape the future of our banks.
APIs, or Application Programming Interfaces for those foreign to the jargon, are a bunch of protocols and definitions used for two different programs to communicate.
APIs are not exclusive to the banking industry. When you play a game on your phone and want to share the results on, say, Facebook, it is an API in charge of connecting the two interfaces. In the same way, APIs will revolutionize the banking industry because banks are now learning how to use open banking to improve their processes. And that brings us to the next question… what is open banking?
Open banking is a fancy way to describe a technology in which open APIs enable third parties to access and process a client’s banking data. In other words, an open banking platform connects all the different financial accounts and wallets belonging to the customer. The open banking platform uses all the data gathered from these different accounts to better predict and advise on different financial matters.
Although it sounds complicated, open banking is a way to improve data management and hopefully make the financial lives of businesses and customers much easier.
Augmented reality (AR)
Although the use of AR sounds straight out of a Jules Verne novel, this technology is already being tested by different companies around the world.
The Commonwealth Bank of Australia, for example, launched an app in 2011 that enabled users to find their dream homes with the help of AR. The Federal Bank of India created an AR calendar through which it shares important messages too.
Different aspects of banking, such as tutorials or presentations, could also be done fully by AR means. Some experts are even talking about virtual bank branch experiences, which would replace traditional banking offices forever.