Published by Jessica Weisman-Pitts
Posted on October 23, 2024
John Da Gama-Rose
ByJohn Da Gama-Rose, Head of Banking & Financial Services for Global Growth Markets at Cognizant / Nageswar Cherukupalli, Senior Vice President, Head of Banking & Financial Services, Americas, Cognizant
The year is 2035. You wake up and check your finances through a voice-activated digital assistant, who appears as a hologram of Elvis. After being authenticated via voice and fingerprint biometrics, the late King of Rock and Roll provides a snapshot of your spending, savings, and investments in a personalised dashboard containing all your accounts and financial data in one place.
As futuristic as this may seem, this is how banking in just over a decade could look and feel. By investing in the right areas and harnessing the power of emerging technologies, today’s financial services industry will be almost unrecognisable in 2035. This will be down to five key technology trends already impacting finance today: quantum computing, artificial intelligence, Decentralised Finance (DeFi), digital ecosystems, and biometric security.
Quantum computing unlocks hyper-personalisation
The convergence of quantum technologies and the financial services industry can provide greater accuracy, efficiency, and security in the products and services shaping the sector in 2035.
One of the most transformative aspects of quantum computing will be enabling real-time hyper-personalisation of financial services. Traditional computing faces limitations in processing and deriving insights from massive datasets. Quantum, on the other hand, introduces game-changing power to analyse big financial datasets combined with deep learning algorithms.
Banks will use these capabilities to understand each customer’s unique needs, preferences, and values. When you walk into a bank branch, a biometrically authenticated quantum AI assistant will already have an intimate grasp of your financial personality, risk appetite, and life goals. All this information will save you time when applying for a credit line or micro-loan, or even creating an investment portfolio. Quantum computing technology will have tailor-made options ready for customers to choose from based on their preferences and financial capabilities.
AI will automate and secure banking as we know it
AI will be at the heart of many disruptions that take place in the banking industry by 2035. Banks are already using AI chatbots to handle customer service queries and for process automation. Integrating quantum power and generative techniques will unlock unprecedented applications for AI in the future.
Smart contracts running on decentralised networks will settle complex interbank transactions and derivatives trades near-instantaneously with complete transparency. Real-time analytics of operations data will allow AI to monitor risks and anomalies and initiate preventive measures continuously. Likewise, fraud identification models will leverage biometric surveillance and quantum pattern recognition to flag threats before they occur, meaning banking will be more secure than ever before.
DeFi and cryptocurrencies will redefine how money moves
Decentralised Finance (DeFi) – which removes financial intermediaries through blockchain networks – and cryptocurrencies will fundamentally change how money moves and banking operates by 2035. Direct access to crypto assets, peer-to-peer (P2P) transactions, and yield-generating open platforms will become mainstream thanks to integrations by trusted financial institutions.
Banks may provide access to regulated stablecoins fully collateralised by currency and government bonds to enable instant domestic and cross-border money movement 24/7. This will mean customers can directly exchange currencies during foreign travel or split bills across currencies in real time without fees or delays.
Banks will also allow clients to tokenise and trade assets, including real estate, precious metals, intellectual property, and more, through licensed decentralised exchanges wired into the traditional finance system. Open lending platforms will enable peer-to-peer loans using cryptocurrency as collateral, and interest rates could be set algorithmically based on supply and demand.
Banks embracing crypto today, like Goldman Sachs and DBS, will have a first-mover advantage as DeFi matures from its early days. Their critical role to ensure its success will be integrating decentralised finance into trusted and secure platforms.
Digital ecosystems and embedded banking weave finance into daily life
The trend of integrating financial services into non-financial platforms is gaining significant traction already with companies like Uber, Amazon, and Apple. From embedded finance to open banking and P2P payments and wallets, the industry’s new collaborative operating models are evolving how financial services are accessed, delivered, and experienced. This convergence will accelerate greatly by 2035.
Your digital interactions – messaging friends, shopping online, or riding in an autonomous vehicle – will seamlessly blend personalised financial features powered by banks and fintechs behind the scenes. For example, when grocery shopping online, you can apply for and receive real-time approval on a micro-loan through your bank to cover the purchase. Your personalised lease extension will be automatically initiated for your review and biometric e-signature – no need to schedule meetings or submit applications.
Biometrics will make banking invisible
The proliferation of biometric authentication, for instance using fingerprints, facial recognition, iris scans, and more, will provide the security scaffolding to make banking invisible in 2035. Passwords and PINs will be substituted by your unique biological identity as your banking passcode.
This will enable more convenient and secure customer experiences. You may access your account via voice assistant just by speaking. Authorising payments could involve simply looking at your phone. Transferring money would only require a quick selfie.
The runway for 2035
The banking experience will be vastly different in 2035 with significant advancements in computing power, intelligent systems, decentralisation, and biometrics. Being digital-first will no longer be enough. Competing in 2035 will require becoming “technology-infused.” But amid this change, banks must keep financial access, inclusion, and sustainability central to ensure technology elevates humanity.
The future of banking will be defined by those who take decisive action today to shape it for the benefit of society. The runway to 2035 is open. It’s time for institutions to accelerate and take banking to the next level.
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