Banks to improve their services via external APIs
It has been years since Application Programming Interface (API) had been used in banks. But API, a software broker connecting applications (including mobile applications) to back-end office IT systems, will increasingly be used to implement new services. As Brand Finance points out, API "provides a portal for pioneering context solutions that are difficult to implement without open banking."
According to IDC, 50% of the prime and secondary banks worldwide will provide at least five kinds of external APIs by the end of 2018. Banks increasingly work with fintech firms through open APIs, part of which will be driven by regulatory requirements.
Capgemini pointed out in the 2018 Banking Trends Report that “The new banking regulations, including PSD2 which concerns the sharing of customer data, have promoted collaboration as well, especially the sharing of these data through APIs. Regulators are encouraging open banking, which drives the bank to open its systems to third parties via APIs to provide account information and payment channels."
Banks still want to control the digital experience of customers, especially when they try to protect their brands. To do that, banks have to open their back-ends via APIs.
Faster pace of innovation is required for banks. Nevertheless, digital innovation is not successful with internal efforts. It is hoped that banks and fintech companies armed with new technologies can work together to achieve their goals. Banks seek digital innovation while fintech companies pursuing "capital, scale, data, customer trust, and regulatory support." In the past five years, fintech firms have transformed from poachers of banks to their partners.
Mobile banking to be more user-friendly
Mobile banking is hardly news in the coming years. Instead, it will be easier to use while offering customers more functions, including digital banking, one-click payment systems, new cryptocurrency mechanisms, password-free biometric technology, location-based services, preferential services, and customer interface.
Apple is developing a direct peer-to-peer payment that will drive banks to make their mobile products easier to use. Banks need to keep up with advances in technology in mobile applications and services.
Artificial intelligence to significantly improve the customer experience
Artificial intelligence will contribute to the implementation of process automation and improvement of the customer experience in banks. “We found that companies are significantly simplifying their processes with intelligent automation, which in turn helps those traditional businesses trapped in complex core systems," said Mitch Siegel, KPMG’s national FS strategy and transformation leader, to American Banker.
A banking system not strictly driven by artificial intelligence and under 24-hour human monitoring will soon be launched. Although the system still requires human monitoring, artificial intelligence helps to automatically repeat and streamline processes and improve customer service through big data. Siegel states that if artificial intelligence allows him to get something faster, he will support it by all means unless the matters are complicated enough to talk to a real person.
As robots cost 50-90% less than offshore or shore employees, banks will make greater investment in artificial intelligence to increase efficiency while maintaining excellent customer service. It is a prevailing evolution of banks in the future to provide unsurpassed customer experience at a lower cost while maintaining the growing need for the most sophisticated business.
In the next two to three years, banks will add artificial intelligence capabilities to their applications. In the near future, when users ask if they afford to attend the dinner on Saturday night, these applications will be smart enough to draw a conclusion based on the user's consumption data and spending habits in the past weeks and months.