“Technological innovations will be the heart and blood of the banking industry for many years to come and if big banks do not make the most of it, the new players from FinTech and large technology companies will.”
——-David Brear, Global CEO of 11: FS
Banking is one of the world’s oldest businesses. It’s been with us in one form or another since the merchants of Ancient Babylon started offering grain loans to farmers who needed to transport goods between towns. It wasn’t until 14th century Italy that banking as we recognize it today developed. In fact, the oldest bank still trading today (the Monte dei Paschi di Siena) was founded in 1472.
When was the last time you actually walked to your bank physically (save COVID-19 era) and spoke to the teller? Several days ago, or perhaps weeks, right? Technology has had a very big effect on almost every area of our lives. From the way we work to how we associate with others or how we entertain ourselves, technology has altered almost everything. The speed that modern technology has developed has meant that the traditionally slow-moving financial institutions have had to invest billions to remain relevant to customers and competitive in the marketplace. Many examples of how technology has impacted banking can be explored:
- Online Banking:
This is perhaps one of the biggest changes that has ever happened in the banking sector. Previously transferring money involved going to the bank physically and making the transfer, but now that is not the case. Today you can easily move money by just keying in your account details online to access your bank account and then making the transfer. This allows you to easily and quickly transfer, manage or check your money from virtually anywhere.
It also means that money stays in the bank adding to the bank’s cash reserves as you no longer need to get out physical cash to pay a bill or a debt. There are also banking apps and services that allow users to easily find details about different services and details of banks. Online banking has literally made it possible for people to access banking services from anywhere in the world easily and conveniently.
- Automated Teller Machines (ATM):
Can you imagine life without ATMs to dispense your money on the spot whenever you need it? These devices grew in popularity in the mid 80’s after Chemical Bank had installed the world`s first ever in the US and there are now over 10 million of them globally.
Super ATMs today sell things like gift cards and stamps while Drive-thru Automatic vending machines make it more convenient for people to get their money. ATMs have made life easier for almost everyone as they can be found anywhere from bars to movie theatres, hotels, grocery stores and more.
- Financial Integration:
Increased online activity in the banking sector has also attracted the attention of other players that are not in the banking sector. Many institutions now provide different banking services such as pay-day loans, prepaid credit/debit cards, cheque cashing services and business loans for a fee. Other online services provided at banks are also available at such institutions.
- It has gone global:
Another big change that has been brought about by technology is globalization of the banking sector. Banks throughout the world now enjoy global presence and are able to transact from anywhere at any time. They can operate across the globe, the cloud making it possible for them to share data easily and conveniently.
- The Internal Hierarchy in financial institutions has shifted:
The amount of soft data held by banks has increased tremendously over the past few years, meaning that data mining is now an integral part of a bank’s operations. This typically means that Information Technology experts are now just as essential as finance experts are to financial institutions. This is especially true as more banks embrace cloud computing. They need IT experts to manage data and keep up with the trends.
- 24-Hour Access:
Online services allow consumers to access banking services throughout the day, seven days a week. You can easily log in to your bank’s site at any time of the day and perform any transaction. This provides people with the convenience of conducting business on holidays and weekends when banks are closed.
- A different sort of Customer Service:
A 2015’s World Retail Banking Report spelled out some bad news for high street banks inthe western world. Positive customer experiences had fallen for the second year in a row. Younger, Generation-Y, bank customers are less likely than their parents to show loyalty to one particular bank. Customers are generally less willing to take their bank’s word for which secondary products such as mortgages and investments they should take, preferring to do research themselves.
Online banking and mobile banking mean that generic customer services are no longer needed. Customers expect a more tailored and personalized experience when they, on rare occasions, need to contact their bank by phone or by chat, or even in person at a branch.
- More competition and bigger challenges:
One of the biggest changes to happen to the banking sector is the opening up of competition to some of the processes that were only ever available in-bank before. Take TransferWise, which can save you on the fee your bank would charge you for an international money transfer, as an example.
It will be interesting to see how banking evolves in the future, and which institutions will be flexible and nimble enough to keep up with the demands of today’s society. What those demands will be and what banking will look like in five- or ten-years’ time is an exciting proposition.
- One quick tap and you are good to go:
Although Mobil first issued contactless cards for customers to use at their petrol stations in the US as early as 1997, the very first contactless cards associated with banks were given out by Barclaycard in 2008. By 2011, mobile technology had merged with contactless, and the first wave of apps that allowed their owners to pay by tapping the phone against the terminal were born.
Google Wallet is now one of the most popular in the world, allowing users to store debit, credit, loyalty gift and store cards on their phones.
Even though this move towards cloud computing looks set to continue, the biggest revolution could still be yet to come as some financial experts feel the sector hasn’t reached its peak yet. Should this be the case then the next 5 or so years could turn out to be as exciting as the past 10 years, as technology continues to structure the way the banking sector operates. It will also be interesting to see which financial institutions will be flexible enough to keep up with the revolution pace.