Last Updated on January 27, 2025 by Mubashir Rafique
The banking and financial sector is among the most responsive and adaptive to technology and digitalization. As the digital economy expands, this sector continues to refine its processes to match current technologies, consumer demands, and preferences.
Today, many new trends and corresponding tools are shaping the future of digital banking. If you are interested in this sector, watching these tools and trends will keep you updated and help you adjust to maintain relevance. This article explores some top tools and trends to watch.
Understanding the Concept of Digital Banking
Digital banking describes a financial solution in which banking services are provided online. Financial institutions provide banking and financial services through digital platforms.
With digital banking, customers can now perform all banking operations remotely using their devices. This allows them to access financial data and perform transactions using their mobile phone, desktop, or automated teller machine (ATM).
Digital banking eliminates the need for physical bank branches and paperwork. It is improving as more banking services are digitized. The shift from traditional to digital banking remains ongoing.
Emerging Trends in Digital Banking to Watch
As digitalization continues to permeate the banking industry, it continues to adapt to simplify processes and improve customer satisfaction. Today, many new trends are emerging in the digital banking sector. Although emerging trends they’ve shown their capacity to shape the evolution and future of digital banking. Some of these trends include:
Open Banking
Open banking is a financial services model where third-party app developers are granted access to customer’s financial data from banking systems using application programming interfaces (APIs). These interfaces guarantee secure data exchange between the banks and authorized software developers and providers.
Open banking promotes account aggregation by expanding data access and connection. This allows producers to create more tailored products and expands customer choices.
Open banking supports a customer-centric ecosystem. It gives customers more control over their financial data and access to more product and service options, improving decision-making and financial management.
Gamification
Gamification is another popular trend in digital banking. It involves adding game-like elements to regular banking tasks on digital platforms to make them more enjoyable. Financial institutions now include challenges, rewards, and other game elements in their mobile apps and online banking platforms to make them more interactive.
This approach encourages customers to interact with them through these platforms, boosting user engagement and retention. Gamification keeps customers engaged and satisfied, building loyalty and connection with the institution.
Hyper Automation
Digital banking now adopts hyper-automation through automation and robotic process automation (RPA). Automation involves using technology to complete tasks without human intervention. Robotic process automation uses software robots to imitate human actions on digital systems when performing automatic tasks.
Automation and RPA are now widely adopted in banking for streamlining many processes, from document processing to improved customer interactions. Statistics show that 53% of organizations have adopted RPA, which helps to perform more complex processes with increased speed and accuracy. With automation and RPA, digital banking offers increased customer satisfaction through real-time assistance and faster query processing.
Banking as a Service (BaaS)
BaaS relies on open banking. It is a financial business model that allows non-bank businesses to offer financial services using the technology, infrastructure, and regulatory framework of banks and financial institutions.
This business model is easily adopted using open banking APIs and benefits businesses in various industries. BaaS provides more flexibility to businesses than legacy banking systems. It offers increased speed and agility, customization, and cost-efficiency.
With BaaS, regular businesses can provide financial products, like offering loans. They can provide customized payment solutions to streamline payments and improve customer experiences.
Hybrid Self-Service
Financial institutions have leveraged trending tools like AI and chatbots to automate many processes, allowing customers to handle many things on their own. However, customers demand more. While these tools improve services, they can’t handle everything.
With more customers demanding human support for complex financial tasks, financial institutions are now embracing hybridization to provide more rounded services. For example, they use digital support for simple tasks like document processing but human support for complex tasks like financial advisory.
Trending Tools in Digital Banking to Watch
Technology has provided many tools with wide application in the banking sector. These tools support many emerging trends to shape the evolution and future of digital banking. Below are some popular tools with great prospects enjoying wide application today:
Blockchain Technology
Blockchain is a digital ledger technology that records transactions in a decentralized computer network. This tool is widely used in digital banking, and leading financial institutions like JP Morgan Chase Co. are already developing blockchain services.
The blockchain ledger technology offers immutability of financial transaction entries. This means that once a transaction is verified by all parties and added to the chain, it can no longer be deleted or altered.
This tool offers increased security and transparency for financial transactions, eliminating the risk of fraud. Hosting the ledger on a decentralized network also increases transparency. The blockchain technology also increases operational efficiency through automation.
Artificial Intelligence (AI)
Artificial intelligence is quickly becoming an invaluable tool in digital banking. It is widely used for personalization, operational efficiency, and risk prevention. In digital banking, AI analyzes large amounts of data and tailors customer service recommendations, improving customer experience and satisfaction.
AI is also an important tool in risk management and fraud prevention. It provides real-time analysis of customer behavior and transaction patterns to identify suspicious activities and fraud attempts. AI in digital banking also supports passport OCR for KYC compliance and fraud prevention.
Cloud Computing
Cloud computing technology supports digital banking with numerous important features and benefits. It helps financial institutions securely store large data volumes and process them seamlessly.
This technological tool facilitates remote access to banking services from different platforms and applications. It enhances collaboration across systems and infrastructures. It enables smooth open banking and banking as a service operation, allowing financial institutions and businesses to collaborate seamlessly.
With cloud computing, digital banking enjoys increased productivity through improved operational efficiency and timely product and service delivery. Cloud computing also increases scalability for financial institutions and partnering businesses.
Chatbots
AI-powered chatbots are revolutionizing personalization in digital banking. These software programs can start and maintain online customer conversations through websites and applications.
Chatbots function as digital personal assistants that provide round-the-clock services, answer customer questions and queries and personalize the banking experience. They are a leading self-service technology that automates customer service tasks for operational efficiency.
Biometric Technology
Biometric technology supports the use of human characteristics like voice or fingerprints to verify customer identity. It allows financial institutions to balance high-level security with convenience and speed to offer a seamless customer experience.
Biometrics are more efficient for identity verification because they are impossible to hack, forget, or lose. This technology is widely applied in identity verification for accessibility and payment processing.
Endnote
The banking and finance industry is highly adaptive to technology and digitalization, aiming to improve customer experiences and satisfaction. As a result, several trends and tools are shaping the evolution and future of digital banking. Emerging trends like open banking, banking as a service, hyper-automation, gamification, and hybrid self-service use tools like blockchain technology, artificial intelligence, cloud computing, chatbots, and biometric technology to influence digital banking’s evolution.