Technology in the banking sector has always existed and this is because banks have enormously relied on computers to record transactions. It has also helped in gaining quick and easy access to confidential information. The Importance of technology in banking sector can be seen with the launch of internet banking, ATM’s, mobile banking, debit and credit cards. However, in the last few years there has been tremendous transformation in financial services; technology has revolutionized in the way we maintain our finances. The significant use of online and mobile banking has created a whole new world of experience. Having said that, we will now look at some areas as to how technology in banking industry has had a marvelous impact.
Impact of Technology on Banking Sector
I. Fewer Bank Visits:
A few years ago when an individual wanted to find out as to how much money was still available in their bank accounts, they had to spend a lot of time driving to their respective banks. Upon reaching there they then had to request one of the staff of the bank to check the ledger and give them detailed information about the available balance in their accounts. However, with the use of technology in banking it has become so easy that without paying a visit to the bank; an individual can track their account details from any place and anytime, too hassle-free.
II. Quick Transactions:
Money transactions have become so quick and easy that any type of bills can be paid without fuss, unlike the earlier days when a cheque had to be presented in order to make a purchase and there would be a long period of wait before receiving the product because the bank had to first clear the cheque. But with the introduction of credit and debit cards, online banking has become so easy to purchase products and pay bills. It almost processes instantly and without any delay the amount debited is immediately reflected on the online bank statement. There is also another amazing feature provided for online banking to pay bills, and that is by giving a standing instruction to the bank for the payments that need to go out every month. So, the bank will automatically transfer funds from your debit account without being notified every month.
III. Customer Service:
Chatbots are another great service that has made a great impact in the revolution of the banking and finance industry. Chatbots are automated chat programs that use artificial intelligence to provide efficient customer service 24/7. Through chatbots, customers are now able to get their complete transaction details online without having to interact with a human. With the help of the chatbots, banks are able to understand each customer’s requirements and then offer customers with additional services that they are eligible for, or reward their loyal customers.
IV. Detecting Fraud:
Prior to the introduction of technology in the banking sector, it was very difficult to detect fraudulent transactions. Then years later when technology was used, the system would help in detecting the fraud transaction, however, the staff at the bank would have the full authority to confirm if there were any fraudulent activity or not. But now with invention of AI or Artificial intelligence in the banking and finance industry, it has become very easy to detect any fraudulent transactions, and this is because AI has an enormous ability to detect and minimize any fraud transactions.
New Technology in Banking:
We will now look at the various types of banking technology used by banks and which in the near future, will be adopted by many other banks across the world. There has been an enormous change in the way banks operate; some of the latest technologies in the banking sector are as follows-
1. Blockchain Technology:
Blockchain is a technology which uses cryptography, mathematical structure and databases that are widely distributed to record or store transactions. As the name suggests, it is a chain of blocks, which means that every time there is a transaction taking place, each transaction is copied or broken down into encrypted blocks which are then added to the chain of computer code in a sequence. The blockchain is like a massive digital ledger that records transactions in a chronological manner, which means that it is next to impossible to tamper, fake or hack them.
Blockchain Technology in Banking Industry –
The Banking industry is among the first industries that has adopted blockchain technology. IT in banking industry has always played a major role and with the invention of blockchain – It is mind boggling to know that this new technology in the banking sector has indeed been a boon to the industry. Let us consider few benefits of technology in banking sector.
Enhanced Cyber Security:
Blockchain is essentially spread throughout the computer network. This makes blockchain secure and trustworthy, because the blocks are immutably linked to the previous blocks. So, if a hacker tries to change transactions in one of the blocks, then he will have to change the transactions in the entire chain of blocks. Not just that, he will not just have to redo that one chain but he will have to redo all the transactions throughout the other chains that is distributed in the entire networks of computers. To put in simple terms, the hacker will have to hack millions of databases in order to make changes in transactions, which is highly impossible. Hence, the blockchain technology enhances cyber security.
Since blockchain is a digitally decentralized ledger which stores records of transactions that take place from peer to peer networks, it makes it easy to remove the third parties or middlemen, thereby massively reducing the transaction costs. This drastic reduction in processing cost benefits both the costumers of the bank as well as the banking industry.
Cost cutting and Convenient:
For years, banks have been using paper for transactions, like the monthly bank statements that were sent through mails or the use of a cheque book. However, with the innovations in the banking sector, blockchain helps the industry to go paperless, which again helps in cost cutting. Going paperless is also convenient to the customers since they will not have to be physically present at the banks and transactions can be easily done online.
2. Upgradation of ATM’s –
The banking system was completely transformed in the way it previously worked with the introduction of ATM’s or Automated teller machines. ATM’s have helped customers to withdraw cash faster from anywhere and at anytime, without the need to fill withdrawal and deposit slips, even when the banks are not open. With just the introduction of ATM’s people all over the world were amazed. However, the more astonishing fact is that these ATM’s will be upgraded, which means that these machines can be operated contactless. Some ATM’s will use smartphones, biometrics and iris recognition to operate in order to receive and make payments. There are two benefits of using this upgraded version of ATM’s-
The upgraded ATM’s will provide security to customers as they will not have to physically carry their ATM cards every time they go out. It will also help in the cards not getting stolen.
Avoid ATM Hacks:
The other big concern among customers has always been with regards to remembering passwords and the ATM pin numbers. This is especially a worry among senior citizens because as they age they often tend to forget their pin numbers. So with the upgrades of ATM’s, it is good news to our senior citizens that they would be protected from hackers and need not worry that their money will be stolen. Also another benefit is that no longer will customers have to remember their pin numbers. Someday, there would even be voice recognition introduced at ATM’s.
3. Smart Watches –
We know of smartphones and almost all of mankind knows how to use a smartphone. Now, there is a variation to this smartness and that comes with smart watches, which is the future of the banking sector. The watches on our wrists are another great creation in the field of technology which is getting smarter and intelligent day by day. There are some fantastic features worth knowing in these smart watches like-
The wonderful part of this new device is that it will give individual attention to each and every customer. This is done by sending a personalized greeting every time a customer enters or exits the bank location through their smart watches.
Easy to Use:
Smart watches not only add to the style statement but also make it easy to transfer money and make payments from your bank. This whole new experience of online banking through smart watches has made life so easy that a customer can interact with the bank right from the wrist of the hand.
To conclude, the field of technology is so vast that almost every day there is advancement. As days go by, the banking industry along with technology is only going to get smarter every day. With each passing day, we will be amazed when we hear of the innovations in the banking sector.