By Amanda Greenwood, Tax Cloud and Myriad Associates   

With the rise of FinTechs, which use insight and technology to meet customers ever-rising expectations, traditional financial institutions (large and small) are being pushed out of their comfort zones and into the deep end of new technologies and agile ways of working.

“According to various consultancies, new players could capture up to a third of incumbent banks’ revenues in the next 2-3 years.” – The Financial Brand

To survive such a competitive industry, banks and financial companies need to swim with the tide of technology, not against it.

But what sort of tech are we talking about?

Here are three of the biggest tech trends that banks need to get on board with:

Banking tech trend #1: The hybrid cloud

You’re probably familiar with ‘the cloud’: the ability to store and access documents, files and media from internet servers instead of a computer hard drive.

But what’s the hybrid cloud?

What is the hybrid cloud?

The hybrid cloud joins a company’s internal, private cloud with one or more public cloud services. This allows the easy transfer of data between an on-premise cloud and a public one, whilst also giving organisations greater control over the security of their private data.  For instance, companies using a hybrid cloud solution often use their private cloud for good storage, easy access and stability, and use the public cloud for the speed and agility needed to improve their customer’s experiences.

How is it affecting the banking world?

“Combining the advantages of both public and private clouds, while mitigating their limitations, leading banks are already pursuing hybrid solutions.” – IBM

83% of banks say that they have replaced their archaic on-premise systems with hybrid cloud solutions. And, according to research, the adoption of hybrid multi-cloud solutions is steadily rising by 13% year-on-year.

There are three key reasons for this:

1. Cost: Storing data on-site with a legacy solution is expensive. It ties banks down to long-term contracts and it can often result in banks paying for storage they don’t use. With a hybrid cloud solution, banks only pay for what they need so the costs are optimised accordingly.
2. Security: A hybrid cloud solution reduces the potential for data exposure as banks can conduct full security assessments and constantly evaluate and monitor infrastructure and application levels.

3. Scalability: If banks adopt a hybrid cloud strategy, they’ll be able to deliver key resources across the business, provide faster solutions for core business problems and respond to customer and market demands quicker.

Banking tech trend #2: Robotic process automation (RPA)

“Robotic process automation (RPA) is a software technology that makes it easy to build, deploy, and manage software robots that emulate human’s actions interacting with digital systems and software.” – Ui Path

Research suggests that spending on robotic process automation (RPA) technology will reach $2.4 billion by 2022. This comes as no surprise when you consider that RPA takes over mundane, mindless tasks to free-up time to focus on bigger ROI activities.

What is robotic process automation?

In basic terms, RPA uses rules-based programming and machine learning to complete defined tasks such as navigating systems, data entry and understanding what’s on a screen or in a document. The beauty of RPA is that it can complete these repetitive tasks quicker, more consistently and with fewer mistakes than any one of us could.

How is it affecting the banking world?

Some of the major global banks such as Axis Bank and Deutsche Bank have already started to incorporate RPA into processes like these:

Customer service: Because RPA can deal with the lower priority customer queries that come through, customer wait times are reduced and call centre agents remain free to focus on the bigger questions or issues that come through.

Compliance: RPA can make sure banks adhere to the vast amount of compliance and regulatory guidelines they need to follow. They can run checks 24/7 to make sure that compliance processes are being followed. So, rather than an employee having to complete these rigorous manual checks themselves, they can now focus on the bigger, better and more interesting tasks that require human intelligence.

Fraud detection: With fraud cases on the increase, it’s becoming impossible for banks to monitor and spot fraudulent claims, transactions and patterns manually. RPA uses ‘if-then’ logic to identify concerning patterns and fraudulent behaviour and then raises them as concerns to look into.

Banking tech trend #3: Augmented reality (AR)

“AR let us see the real-life environment right in front of us—trees swaying in the park, dogs chasing balls, kids playing soccer—with a digital augmentation overlaid on it.” – The Franklin Institute

A focus on R&D and innovation coupled with the uptake of augmented reality (AR) across all industries means the global augmented reality market is estimated to reach $340bn by 2028.

What is augmented reality?

Do you remember the ‘Pokemon Go’ app from 2016? Where people (young and old), would race around towns and cities using their phones to capture Pokemon characters that would pop up on pavements, in shops, and even on the bus? That’s augmented reality.

AR overlays computer-generated images onto someone’s real-life view and enhances it with sound, touch and sometimes even smell.

How is it affecting the banking world?

Many banks and financial institutions have already integrated AR into their products and services.

For example, Axis Bank has incorporated AR into its mobile app. Customers can set their geographical location and the app will show them the nearest ATMs and branches and offer them directions.

Other banks, like Westpac Bank in New Zealand for example, are allowing their customers to scan their debit or credit cards with their phone camera. Then, they superimpose the customer’s current balance over the image of the bank card.

And, Mastercard has partnered with an AR company to allow customers to pay for a virtual golfing experience in the virtual world!

It won’t be long before virtual banks will replace physical ones.

Innovative technology is impacting every sector, but banking and finance especially. FinTech companies are on the rise, with new FinTech initiatives in place to boost the industry.

To stay afloat, banks need to partner with FinTech companies and prioritise the uptake and implementation of new tech.