Banking Technology Trends and Digital Transformation
Banking technology refers to the methods, software, and systems used by banks to process banking transactions. This technological field is becoming increasingly relevant as regulatory and IT costs increase in importance. Banking technology services will increasingly improve the way that individuals and institutions process through the various channels of loans, savings, investments, credit, and checks. Some of the most common banking technologies used today are discussed below.
The latest development in banking technology, the distributed ledger, is an online database that stores and tracks all types of financial transactions, such as those that take place between banks, consumers, and other institutions. The distributed ledger was created by a group of banking experts based in New York City called the Distributed Ledger Project (DLP). This project brought together various groups from across the world who were interested in building new technology for the financial industry. The DLP now serves as the basis for several different open-source software products that have been developed as solutions to various banking problems.
Another major technological advancement in recent years has been the development of software applications that provide quantitative tools for tracking and analyzing customer experiences. Such tools may include metrics, which measure attributes such as customer satisfaction and customer retention. Banks need to monitor and analyze their marketing campaigns, customer retention rates, and their strategies for attracting new customers. Software applications can be built into the financial institutions or they may be purchased as stand-alone products. Many of the new features designed for banking and retail banking are focused on simplifying the tasks that customers typically face when dealing with banks.
The latest development in the banking industry is the development of the distributed ledger, also known as the blockchain. The blockchain is an online ledger that is secured by mathematical proof instead of by traditional storage media, such as paper records. Distributed ledger technology trends such as the distributed ledger work as a ledger application on a public network.
The final of the technology trends impacting banking is pandemic security. As the world becomes more knowledgeable about the dangers posed by credit card fraud, banks are more concerned about protecting themselves from illicit activity. Banks are introducing advanced security measures such as fraud alerts, identity theft protection, and fraud insurance, all of which are designed to prevent illicit activity, such as money laundering and terrorist financing. Biometric authentication is a particularly popular aspect of fraudulent activity mitigation, as banks are introducing more measures that are able to spot fake fingerprints. Many banks are implementing facial recognition systems for additional authentication.
The potential ramifications of the digital transformation are far-reaching. However, the most visible impact is seen in the area of payment processing. Digitalization and automation have made it easier for financial services companies to process electronic payments, and this trend is set to continue. Banks and other financial services companies are currently undergoing the digital transformation at an accelerating rate, and the effects will become visible to all consumers very soon.