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techsuch May 9, 2021 0 Comments

8 Key Financial Drivers that Shape the Banking Industry in 2020The banking industry is up for major transformation in the upcoming years. Ithas transformed up to a great extent, but the technological impact is going tobring a major transformation in the upcoming years. Not just technology;changing customer behavior, digital transformation, and growing regulatoryrequirements have made it obvious for the banking industry to look for a majorevolution.## Varying Customer Priorities and BehaviorsIt won’t be wrong to claim that the evolution of the banking industry is alsoa reflection of changing customer behavior. The mode of access or collectinginformation has significantly changed over the years. To be specific,customers are more interested in digital communication, which makes thingssimple yet effective. It is incredible to witness the technological or digitalenrichments in core banking functionalities and operations.All these are the outcomes of meeting personalized customer demands. To sum upthe changing customer behavior in a single line, it can be concluded that thebanks have understood that the need of the hour must be immediately addressed.After all, customer experience has started being a distinguishing factor inthe financial services industry.### 1. Digital TransformationUpgrades in digital technology have started offering varieties of modes forinteracting with the customers in modern times for the banking industry. To bespecific, the modes like internet banking or mobile banking have significantlychanged the way of interaction with the banks and accessing the transactiondetails. Moreover, high-end analytics tools are being used to make thecustomer experience more engaging than ever.It is obvious thus to bring changes in banking regulations or to make it moretechnology-oriented. It is not just that the industry has transformed fromfunctional perspectives; it has witnessed the major operational transformationas well. Along with customer user experience, back-office systems are beingmodified and enhanced. As explained above, the advancement of core banking ispretty evident.Digital transformation is not the only technological advancement witnessed inthe banking sector. Robotic process automation or RPA in banking is being seenas a major revolution. Robotic process automation is about the usage ofvirtual assistants or software used for addressing repetitive tasks. A virtualassistant here also refers to programmed robots.Usage of tools of such is going to drive the modern-day and future bankingarena by cutting down the manpower requirements. The best part about RPA inbanking is the way it makes things effective in a much cost-effective fashion.The entire banking functionality can be structured to be automated in manyways.Interesting here is to note that the banks have already used it like thereplacements of their employees, as it can interact with through technicallyenriched user interfaces and can also deal with optimized applications.Undoubtedly, the future of the banking industry is going to be greatlyrevolutionized through RPA.### 2. Regulatory MeasuresBecause modern-day technology is getting more and more data-oriented, settingup fresh data protection regulation has become imperative for the industries.This is expected to be somewhat challenging, with the added concerns ofstreamlining the experiences of the customers. Emphasis is going to be moretowards the interactions involving a nominal touch.Through the process, it is certainly going to reduce the various kinds ofthreats associated with regulatory affairs. At the same time, theoptimizations of such can make the entire system more financially beneficialas well. Customer-oriented platforms thus are said to be one of the keybusiness drivers in contemporary, as well as the future banking industry. Onething here can be noted is that technology lies at the core of all sorts ofthe transformation of banking procedures.### 3. Fintech Service ProvidersFintech providers are certainly going to be the key business drivers in thebanking industry. Their role is going to be even more impactful. There shouldbe no surprise about this upon observing the way these technologies havecompeted with the usual ways of delivering financial services.Though it is still an emerging concept for the banking industry in remoteparts but looks established in major sectors, it promises a lot from futureperspectives. Fintech can indeed be claimed as one of the hottest bankingindustry trends at present. Specifically, their role is expected to be themost effective in the upcoming retail banking market, which is going to bemore technology-oriented.### 4. Business and Revenue-Boosting ModelsPersonalized banking experience is being given a lot of importance in moderntimes. This is one aspect that can be decisive in terms of keeping competitorsat bay. The banking industry outlook is getting more digital technology-oriented. Innovation in digital technology has enriched customer experiencethrough a high-end user-interface. The fintech companies are emphasizingpreparing roadmaps based on the same technology. Data management tools andanalytics tools are being used and going to be extensively used to enrichsustainability in the banking sector.The smooth performance and customer engagement in the banking sectors ofmodern days are said to be due to the advanced process optimization. In otherwords, there is a significant transformation that has occurred in terms of theoperation mode of the global banking sector. The level of enhancement of corebanking like vital models have managed to deliver superior business goals. Inother words, it can be claimed as the prime revenue driver for banks.Leveraging digital technology in this context, the emphasis is being giventowards the development of up-to-the-minute business scope. Ultimately, astreamlined process helps deliver a better customer experience — the immediatebusiness scope of such help the customers or clients in taking immediatebusiness decisions. In short, the idea of enriching customer engagementthrough process optimization and the technologies meant for the same can bethe key drivers of the banking industry.### 5. Changing the Scenario From a Lender’s PerspectiveA lot has been already discussed regarding the evolution of customer behaviorover time. At the same time, liabilities of the lenders about the economicalchallenges of the banks are going to be the critical factors. The risk factorsconfronted while deciding whether to grant or deny loans have been decisive.Functional models of the banks and other financial institutions have beentransformed as well. Scenarios are being tried to be changed through theintroduction of creative ideas like instant payment schemes. However, there isstill no alternative to limiting the occurrences involving greater financialrisks.As per the present scenario, liabilities can be strategically kept under thecarpet. In this context, it is considered essential for the lenders to come upwith their modes for greater assessment of probable threats. Specifically,proper analysis is required when it comes to high-value financial payments.### 6. Efforts to Minimize the Risk factorThe compulsion of a borrower to address the possible threats is a key factorin analyzing for getting it well about their efficacy to pay back the loanamounts. Financial service providers have a great role to play in thiscontext. They are the people ultimately who have to have thorough knowledgeregarding the ability of clients. Undoubtedly, they have been the businessdrivers for financial companies.But, with transforming scenarios, these business drivers’ financial serviceshave to transform as well. Upon observing the regular modes of thefunctionality of the banking industry, the emphasis has always been givingtowards sustainability and enduring customer relationships. To ensure that thebusiness does not get affected and the relationship remains similarly endured,banks should come up with new products or loan payment models, where thefinancial threats remain nominal.### 7. AI Being the Key DriverBecause data and technology have traditionally been the bank performance,drivers, concepts like AI in banking are obvious to be the game-changer. AI iscertainly going to streamline the banking procedures in a great way. Expandingthe scope of automation, technology can indeed make the process more effectiveand productive at the same time. With automation, it is obvious for the entireprocess to be accomplished in a cost-effective fashion. All that the bankshave to ensure is that the privacy of customer data is thoroughly secured withthem.### 8. Cloud ComputingThe impact and acceptance of cloud computing in the banking industry are verymuch evident. A lot has already been discussed regarding the growing interestin cloud computing principles among the banking sectors. The rate of migrationover the cloud platform among the banks and financial organizations, even atremotest parts or small towns has significantly grown. Successfullyintegrating all the units and segments of a bank or financial institution, andstreamlining the data access, has been phenomenal all the way. Naturally, itis growing at a bigger scale and in a very encouraging way, is prettyunsurprising.To conclude, the banking industry is indeed up for major transformation, theprocess of which has already begun. As discussed above, there are majoraspects that can be the key driving factors. And, it’s the technology and datathat is evident to be at the intersection space of all these factors.

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