The advent of digital technologies has significantly transformed the traditional banking industry. Now, this thriving sector is shaped by such innovations as artificial intelligence, machine learning, the Internet of Things, robotic process automation, blockchain, and cryptocurrencies. Still, these aren’t all the digital banking technology trends that are set to revolutionize the industry in the years to come. In this article, we will delve into the potential benefits and challenges associated with these and other advancements, with the goal of taking a deeper look at the future of digital banking.
Trends Shaping the Future of Digital Banking
While many of the digital banking trends we’ll explore below may not be brand new to 2023, their significance lies in their enduring impact on the industry.. They have been gaining momentum over recent years and are expected to gradually redefine the way modern users bank, and financial institutions respond to their ever-evolving needs.
Artificial intelligence and machine learning
Artificial intelligence and machine learning are the most prominent digital banking trends that are here to stay. It is projected that AI in digital banking market size will reach $64.03 billion by 2030, compared to $3.88 billion in 2020. As AI and ML continue to advance, their integration in digital banking will expand, going beyond their current application in the industry.
In 2023, fraud detection, prediction, and prevention is the main use case of AI technology in digital banking. By continuously analyzing patterns and anomalies in transaction data, AI-powered systems can spot potentially fraudulent activities and trigger real-time alerts, allowing banks to act proactively. Advanced algorithms can also analyze the behavior of authorized users to detect any deviations, suspicious transactions, or activities, and flag them as potential fraud.
Manual and routine process automation is another capability of AI and ML that changes the way banks and financial institutions operate and work with data. For example, AI-powered systems can automate document verification, data entry, and compliance checks, significantly reducing the processing time and increasing operational efficiency.
Voice banking and personalization
Voice banking and personalization are other increasing trends in digital banking. In 2023, they are at the heart of the most innovative digital banking apps. Voice technologies, such as virtual assistants and voice-enabled devices, offer a new level of convenience and accessibility for banking services. With their help, customers can perform basic operations, such as checking account balances, transferring funds, or making payments in a hands-free and more natural way.
Additionally, voice technologies enable personalized experiences by recognizing individual customers and their preferences. Being guided by customer personal and behavioral data, such solutions can offer custom-matched financial products or provide personalized financial advice related to investing, saving, or budgeting. These personalized experiences not only enhance customer satisfaction but also build stronger engagement and loyalty while increasing operational efficiency.
Augmented reality and robotic technologies
Emerging trends in digital banking are increasingly featuring technologies like Augmented Reality (AR) and robotics. With their potential to blend together the physical and digital worlds and provide a customer experience of a completely new level, they are promising groundbreaking changes to the industry. AR-powered apps can provide customers with virtual tours of bank branches, allowing them to explore the facilities and learn about different services.
The application of this digital banking software becomes even more exciting when it goes beyond financial technologies only. For example, BBVA, a multinational Spanish banking group, launched an AR mortgage app that enables customers to explore available properties in an augmented reality mode and instantly calculate the mortgage costs.
Similarly, robotic technologies, often embodied as AI-driven chatbots or even physical robots, are enhancing customer service in banks. The Bank of Tokyo-Mitsubishi UFJ introduced NAO, a humanoid robot that interacts with customers, helps them with standard questions, recognizes customers’ emotions, and responds accordingly.
Blockchain and cryptocurrency adoption
Blockchain and cryptocurrency adoption is a significant trend in the realm of digital banking, as well as its significant challenge. On the one hand, blockchain enables secure and transparent transactions, eliminating the need for intermediaries, reducing payment processing time, and decreasing the related costs. Additionally, blockchain technology can streamline and automate routine processes with smart contracts, plus it can offer better financial inclusion to the unbanked or underbanked populations.
However, this promising trend comes with its challenges, with regulatory uncertainty being the main one. To date, there is no single regulatory framework as each country has its own approach towards blockchain and cryptocurrency regulation. This lack of harmonization makes it difficult for banks and financial institutions to leverage blockchain technology and offer cryptocurrency-related services to their customers. Scalability is another obstacle, as blockchain networks currently face limitations in processing a high volume of transactions quickly.
Mobile-first banking with enhanced UI/UX
Mobile-first financial service is an increasing trend in digital banking that is at its heart. From intuitive navigation to personalized recommendations, banks are leveraging design thinking and mobile-first approaches to attract and retain customers. This trend places mobile banking apps at the forefront of customer interaction with financial institutions.
By 2025, it is projected that more than 216 million customers will use mobile banking apps in the US only, so giving such an opportunity to your users now can become a future-proof strategy for your financial institution as well. By embracing the mobile-first approach and providing an enhanced UI/UX, banks can stay ahead of the curve, and we, at Tino Agency, would be glad to help you transform your mobile banking app into a future-ready platform.
Our company offers top-notch mobile banking app UI/UX design and development services, inspired by the latest technologies and effective design principles. Being one of the leading custom digital banking solutions providers, we are here to help you redefine the UX your customers receive while ensuring compliance with industry standards and regulations.
5G and IoT adoption
5G and IoT adoption are becoming new trends in digital banking with the potential to transform financial services delivery. 5G, the fifth generation of wireless technology, offers faster speeds, and higher capacity, enabling seamless connectivity for a wide range of IoT devices that can be used in banking.
Together, these technologies enable real-time data collection, analysis, and communication, leading to enhanced customer experiences and personalized services. For example, IoT devices can be used to gather real-time data on customer behavior. Since IoT devices are poised to generate a tremendous amount of data, it can be analyzed and utilized by AI algorithms to provide insights and improve decision-making.
Furthermore, blockchain technology adds an additional layer of security to IoT solutions in banks. By ensuring the immutability of data stored on IoT devices, blockchain prevents unauthorized tampering, providing an extra level of trust. As these innovative technologies are becoming more interweaved, banks can harness their collective power to create more efficient, secure, and customer-centric banking experiences.
Digital banking technology will continue to evolve. While modern customers’ reliance on fintech solutions grows steadily, it is crucial for banks and financial institutions to stay ahead of the curve and embrace the emerging trends we’ve explored in this article. So, if your fintech company or newly created startup aims at providing innovative digital banking solutions that cater to the evolving needs of modern customers, partnering with a tech-savvy development vendor would be the right strategy for your business.
At Tino Agency, we have extensive expertise in digital banking solutions software development. Whether you’re looking to create a mobile banking app that prioritizes user experience, integrate cutting-edge AI capabilities, explore blockchain applications, or embark on any other digital banking venture, our team is ready to collaborate with you.
Reach out to us now to discuss your innovative ideas, and digital banking needs to create a comprehensive development strategy and build a transformative digital banking solution!