Digital Banking Trends to Keep in Mind for 2023

15 Dec 2022

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With the advent of technology in banking, we are already experiencing a significant change in the way digitalization in banking is affecting the Indian population. Indian consumers, merchants and local vendors are getting used to the technology of cashless financing. Banking apps are also focused on customer ease and solutions, tapping all customer need with intuitive analysis, hosting payment gateways to other more complex solutions, this trend is bound to take off more in the coming years. Though the trend has caught more with the younger generation, it is equally important to upskill the older generation less proactive to the change. Also, while the urban population is holistically gripped by fintech through payments, investments and credits, the digital divide is strongly noticed in rural sectors that still lack technology, education, and training. While COVID-19 leapfrogged mass digital inclusion, bringing the entire population under the Digital Ecosystem will require greater accessibility through regional language, region-specific studies with organic development through offline ambassadors creating a local connection. We know that in India, the government has already set these initiatives in motion, let us see what digital banking trends 2023, hold for fintech digital banking.

Digital Banking Trends 2023

Preference for digitalization in banking

Contactless digitalization in banking will be a point of preference for consumers. Offline banking will soon lose customer attention and digital banking trends will gain traction. Physical banks may reduce in the future but in 2023, we will continue to see operational physical banks.

Banking will boil down to customer experience

Digital banking trends already reveal how much customer experience is a determinant factor that edges financial service providers towards customer retention. Products and services that enable customer-friendly applications while fulfilling their needs independently without human intervention, and one window operation will make a difference. The constant endeavour of banks to upgrade their service quality is in the process of customer feedback. Therefore in 2023, it can be expected that banks will work with greater experience wrapping advanced analytics, customising products, anticipating needs and reducing costs. The greater the thrust on individual customer experience the more loyalty and retention will bring profits into the business.

Increasing digital channels in banking

With neo banks gaining ground in the Indian financial landscape, open API banking gives data access to third-party fintech. Apps with faster transaction ease are providing secure service to customers. These open banking apps have reached the smallest vendor level upselling products and enabling transactions. With data integration, they are equally conscious of customer experience and fast innovation. Introducing automated variation and other facilities also opens doors for hacking. However, the API preference has made room for a customer comfort game changer. Developers will ensure data leakage to external parties is prevented and will find the best security measures to integrate these technologies.

AI upped digitalization in banking

As we come close to Q4 of 2022, many banks are laying thrust on digital solutions to extend their customer base. To prevent fraud and violation banks are involving pure technology companies that can save them from future breaches through better management of specialised data analytics. Reaching out to the customer in their language of comfort and greater inclusion of FAQ replace call centres with chatbots and virtual assistants. Some banks have already started including chatbots for customer ease. The younger customer seems well adjusted to chatbots and this technology will surely emerge stronger in digital banking trends. Chat bots, besides handling customer queries on banking services, will also have access to the customer's financial data. This would enable this AI application to play a more significant role in customer relationships by suggesting various products that the customer could benefit from. Working with customers, voice payments in banking will act like virtual assistants to simulate the physical and digital capabilities of the bank, benefiting the customer with the best service. So, it can be predicted that in 2023digitalization in banking will find greater AI involvement.

Fintech digital banking unwraps new competition

Banks will need to gear up and stay ahead of the competition posed by new financial players in the market. Fintech solutions such as peer-to-peer (P2P) platforms, those that offer Robo-advisors and digital wealth management tools provide a fillip to open API enabling account management through self-service. Fintech digital banking solutions pioneered by various digital payment solutions and have now emerged as competitors. Banks are partnering with these fintech digital banks to create better banking solutions.

BNPL

The rapid progress of Book Now Pay Later (BNPL) over the last two years has been significant. Customers enjoy greater freedom in using their funds for e-commerce shopping and instant credit through the BNPL platforms. The instant payment facility allows flexibility to online shoppers who can buy now and pay later in EMIs. The BNPL apps became the preferred credit offering provider during the COVID-19 times. Small ticket-size loans supported by NBFC lenders also caught up with customers. The future holds greater regulations on short-term time lending products for BNPLs, controlling the growth in easy loan disbursement for this segment.

Digital Banking Units

Banking services are set to touch the last mile with the 75 Digital Banking Units (DBU) initiative. Embracing greater banking inclusivity, India is poised towards a progressive banking system consolidating the digital ecosystem by facilitating improved and seamless banking for all. In the future, the country is ready to boost digital initiatives in banking that touch the hinterland and combine all under uniform digital financing.

The larger role of Big Data and Analytics

The importance of big data has been realised by banks for understanding customer behaviour and personalising service through predictive tools. The future enhancements in digitalization in banking will depend on translating the results of analytics into practice. While intuitive data collection will make a powerful appearance, understanding the actual intent of the customer will demand greater study leading to business conversion.

Blockchain in the banking sector will take on a larger role

Financial activity will be inclusive through blockchain banking. KYC and due diligence that requires verification, contract execution, tracing, and data protection will be enabled through blockchain which does not allow alteration or deletion of the stored data increasing task completion without intermediaries further releasing the pressure and role of traditional banks. Banks will include regulated and standardised cryptocurrencies that require blockchain technology. Users can trade, exchange, lend and borrow from the digital currency that will emerge as an alternate digital currency option for users.

Opportunity for metaverse in banking

After digitalization, the next big change that would affect banking is metaverse technology. What does this entail? This technology would enable you to virtually enter your bank branch and be assisted by a virtual customer representative avatar who could take you through a loan process or access your vault. Metaverse will probably bring back the read-write practice of building security that mobile banking applications have changed. Blockchain holds great relevance for various banking applications and not just NFTs and cryptocurrencies. Metaverse combined with Blockchain can open new possibilities in trade, purchase, and transaction. AI, VR combined Metaverse will foster healthy customer servicing and train future banking employees.

No-code/low-code (LCNC) platforms enabling faster banking service

Customer-centric products expect cutting-edge technology like No-code/low-code platforms. The technology makes it possible to complete the development of user-friendly programs in days rather than months making platforms easier to access and simple to handle. LCNC paves way for banks to become more self-serving than relying on external agencies to help them fulfil the role of digitalization in banking. These offer unprecedented speed boosting which is 10 times faster and scaled for user ease. It allows rapid application development and deployment in days as opposed to low-hand coding which can take months to develop.

Final Thoughts

The role of digitalization in banking, as digital banking trends reveal, is poised for new developments. Customers to be attuned to digitalization in banking should ask themselves how some of these technologies can enhance their banking experience. Will it build a better retailer journey, and will it attract more customer loyalty with embedded financial options? Will fintech digital banking help cut costs for small businesses? Once you find the answers you will know exactly why you wish to be part of this transformation that is only set to grow making huge changes to banking in the next five years.

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