The coronavirus has accelerated the introduction of digital banking into everyday life. Events that happened in months could take up to 10 years. According to Fitch Ratings, the significant growth in deposits in US banks has nothing to do with the size of the banking network, which continues to decline rapidly – banks that have already invested in digitalization are in a stronger position than those that did not develop a self-service system and online services.
And this is just one of the trends. In a partner article with Bank BelVEB, which entered the top 20 innovative banks in the CIS and the Caucasus according to the results of the SME Banking Club study, we examined the development trends of digital banking.
Let’s start with what digitalization is. This is a global trend that involves the introduction of digital technologies into the company’s activities. It can penetrate to a wide variety of levels, from a specific department of an enterprise to the entire country.
Here are the main trends in the digitalization of the financial sector:
Creation of digital ecosystems based on banking infrastructure
Growing capacity to process more and more transactions
Artificial Intelligence Implementation
Development of digital profiling
Creation and maintenance of a seamless environment.
These trends are typical for banks all over the world. Belarus continues to be one of the leading regional players in certain areas of digitalization.
Building digital ecosystems
Banks have come a long way from classic offices and purely paper work to entire digital worlds that include many services. The modern ecosystem offers not only financial services, but also non-financial products. According to McKinsey’s forecast, the ecosystem economy will be $ 60 trillion by 2025.
If earlier the bank was exclusively about money, now it is about a lifestyle and long-term relationship with a client. Banks are beginning to close almost all the daily requests of users – from the ability to pay for “communal” in one click, we have moved, for example, in the automatic payment of insurance. And corporate clients can not only make payments and get a loan, but also find the right suppliers, contractors, solve pressing problems and improve the business model. And everything is in one place.
For example, Bank BelVEB has chosen the “easy bank” model and is banking on technologies that facilitate remote digital interaction with corporate clients. It is very convenient: in one system, you can apply for a loan in a few clicks and make the desired payment. With the help of the Internet Banking system, the user gets access to almost all of the bank’s products.
In addition, Bank BelVEB made it possible for existing corporate clients to open second and subsequent accounts in the Internet-Bank system without visiting offices in 24/7 mode – literally here and now. The client will be able to use the account immediately.
And at the beginning of 2021, Bank BelVEB launched BelVEB Business Hub – an online platform for providing comprehensive support to enterprises and entrepreneurs.
Processing a large number of transactions
The number of non-cash transactions is growing all over the world. The National Bank of Belarus summed up the results of 2020 and stated that the volume of non-cash payments in the country increased by 31% over the year. The total share in the country is 59.5%.
The situation is the same in other countries – according to a study by the AFK analytical center, over the past year in Kazakhstan, the growth of non-cash transactions has grown 2.6 times and is now 67%. And according to the Central Bank of the Russian Federation, the figure has exceeded 70%. The forecast for 2021 is 75% of the total number of transactions, for 2022 – 80%.
Even a small business goes into a cashless plane. For the convenience of its customers, Bank BelVEB launched the Smart-cashier product, which combines the functions of several devices at once – cash registers with online data transmission to the tax office, a banking terminal, a barcode and QR code scanner, and a full-fledged cash register program. Thanks to this product, Bank BelVEB entered the top 20 innovative banks in the CIS and the Caucasus.
With the accompanying increase in technological capacity, banks will be able to process a huge volume of transactions. And global giants, such as Visa, are making efforts to ensure that the increasing volume of transactions does not affect their convenience and security.
Artificial intelligence and machine learning are transforming the banking landscape, both offline and online, at a tremendous speed.
Machine vision technology and IP cameras, which are powered by artificial intelligence, can be used to analyze the queuing process at different times of the day.
For example, Intel’s AI facial recognition system will be able to identify an unauthorized user who is trying to access an account, take a snapshot and block a transaction. This gives banks the opportunity to more correctly build a work schedule for specialists and improve the quality of service.
Chatbots have also become a trend. The technology already allows responding to simple customer requests, and in difficult cases, redirecting them to live specialists.
Thanks to the development of IT developments, banks will form a digital portrait of customers. It will include not only storing the history of interaction with the client, but also the analysis of his needs. Now both banks and specialized organizations are engaged in profiling. For profiling, special software is being developed to reduce risks for the bank and increase comfort for the client.
For example, the Center for Financial Technologies of Russia already offers a cloud service for the formation and maintenance of a digital client profile.
With the development of technology, the boundaries between user actions on the Internet and everyday life are blurring. Banks strive to provide a user experience in which the customer will not feel the discomfort of changing consumption channels. This trend is called omnichannel or seamless.
This approach allows you to customize your communication with the bank. The bank provides services from anywhere on any device. Consumers will be able to use any banking services, carry out transactions, receive support from specialists, regardless of whether they communicate through a mobile application, website, bank branch, call center or even a social network.
For example, in China, ICBC bank provides its users with the WeChat Banking service. Through the messenger, you can receive full service, carry out any operations. You don’t have to install a separate application for this.
The digital revolution is just beginning. The main task now facing the banking sector is to provide high-quality and convenient service for clients, as well as to minimize the time for rendering services, and to reduce errors due to the human factor. In the near future, we can expect more active use of chatbots from banks, an expansion of ecosystems, an increase in the speed and quality of service.