Three areas of tech innovation banks should consider in 2021
If you’re looking for inspiration, consider how much more comfortable consumers are with online banking today than they were 10 months ago, nevermind 10 years ago. There is less of a need for brick-and-mortar branch offices than ever, and this decentralization opens the door to new opportunities. Banks can now adopt technologies designed for a fully digital customer experience with confidence that consumers will adapt.
With this in mind, consider these three tech innovations that will help ensure that your bank stays competitive in the post-pandemic landscape.
Blockchain technology is here, and the benefits are real. Incorruptible ledgers bring five interlocking benefits to the banking industry that we could also use as the industry shifts deeper into digital operations and cybersecurity threats increase.
This technology may not be brand new anymore, but it remains the gold standard for sharing information between two parties that may not be familiar with each other and ensuring that unique transactions are not duplicated. Blockchain brings consensus, authentication, validity, immutability, and unique identifiers to transactions that can transform everything from mortgage servicing to transfer oversight.
The major benefit of blockchain technology for banks in 2021 is that it can reduce the cost of overhead by making expedited processing – nearly instantaneous clearing and settlement – the new norm.
#2: Robotic Process Automation
In 2021, banks can reduce human errors by automating tasks that humans tend to flub. Data entry, counting coins, and screening for fraudulent transactions can all be done by Robotic Process Automation (RPA).
RPA isn’t the solution for every task, but as banks continue to transition to digital models in 2021, there are more opportunities to automate rote tasks than in the past, which is good news for the people in your organization who are more interested in building relationships than data entry. It’s time to free up your staff for higher-impact work and relationship building. Customer service is still best done by real people who can connect across channels.
#3: Quantum Computing
Quantum computing is a rapidly advancing and fundamental leap in computing that can solve exponential problems (like those found in finance) in ways that a traditional computer cannot.
Theoretically, with quantum computing technology, we will be able to predict what will happen in the market when the next crisis or when the next pandemic hits.
This power can also be applied to financial institutions. Banks can leverage this technology today and into the future to improve portfolio management through rebalancing and allocations,
cash management, arbitrage, and capital allocations. Quantum computers have a decided advantage in analyzing scenarios that include nonconvex discontinuous values, such as interest-rate yield curves, transaction costs, trade size and quantity restrictions.
Quantum computing is still in its infancy and is advancing very rapidly. Banks that get out in front and figure out how to get advantage from it will be at a decided advantage.
COVID-19 accelerated tech investment with a focus on security
The ongoing pandemic has accelerated investment in technology across industries, as much of the world’s workforce was pushed to go fully remote overnight. But the regulatory compliance and digital security needs of financial institutions did not change as fast (nor should they).
The good news is that the world’s focus on a remote workforce has come with a renewed focus on digital security, and indeed that is much of what interest in blockchain adoption is all about.
As these priorities align, 2021 will present opportunities for banks to find ways to apply innovative technology to old problems, improving digital banking services and the bottom line.