We have seen an explosion in popularity of mobile and online banking in the last year, but there are more technology trends coming to the financial industry in 2018. Almost every product or service offered by financial institutions is enabled by technology. This partnership advances product offerings, provides a positive customer experience and ensures the services and firms are operating efficiently.
Here are six trends to keep an eye out for in 2018:
1. Say Goodbye to Good Old Banks
A report by Forbes says 40 percent of Americans have not gone to a bank or credit union within the last six months. They also reported that the number of physical banks has dropped by almost have since 1995 to 2015 due to the rise of online and mobile banking.
With so many users doing their banking online and on their cell phones, the need for physical bank locations has declined. Even the users of online banking platforms have declined with many of them preferring mobile platforms that allow them to budget, bank, pay and crowdfund all from their mobile device.
We have seen a huge wave of criminal attacks on financial institutions in the last couple of years. This is why security is a “must-happen trend” in 2018. These attacks have resulted in the stealing and profiting from users’ personal information.
All European Union citizens will be seeing a great change in security in 2018. That change is the General Data Protection Regulation. The regulations are designed to increase data protection for all individuals within the EU. Companies must be compliant with the regulation, and those that are not may be subject to large fines.
The attacks we have seen in 2017 have been the result of a failure in security and privacy controls. In 2018, institutions will focus on using technology and ensuring it is safe and secure for all users.
3. Increase in Blockchain Technology
Blockchain is the technology behind the digital currency, Bitcoin, but the tech community is finding different uses for Blockchain. Blockchain is an open distributed ledger that records transactions between tow parties in an efficient and verifiable way.
What makes Blockchain so popular is that it allows for safe and secure trading of almost anything from money to ideas to royalty fees. It eliminates the middleman formerly needed to manage the transaction — and it is all done virtually.
4. Use of FinTech Firms
We previously discussed that customers are not only moving toward mobile banking, but also toward completely new ways of spending and managing their money. These are called financial tech firms, or FinTech firms. They are not subject to financial regulations, and they offer more freedoms. They are giving consumers the opportunity for crowdsource funding, refinancing and borrowing money — simply and without a lot of fuss.
FinTech firms are growing in popularity because they are cheaper than traditional banks and much easier to use.
5. Even Less Physical Currency
Many people don’t carry physical currency, instead opting to use things like credit cards. However, digital currency even reduces the need for those.
6. Constant Innovation
Today, what helps FinTech industries stay competitive against larger institutions is their ability to innovate. These companies put pressure on established institutions to continue to innovate as well.
Part of this innovation is digital transformation. Social, mobile and cloud-based technologies offer promises of cost-saving and security. Mobile banking gives consumers a convenient way to spend and save.
Key factors that drive innovation and transformative changes include improving operations, making easily functioning services and products and regulating compliance.
Rapid Change Can Be Good
It is easy to feel like all of the changes in the financial industry have come rapidly and have been hard to keep up with. It may seem like only yesterday when you were waiting in line at a bank to deposit a check, and today, it’s as easy as taking a photo with your smartphone.
Today we can send money to each other instantaneously, pay bills automatically and crowdsource more easily. All of these changes have made banking easier to understand and easier to do — and they require the financial industry to keep up.
Business technology expert and founder and editor of Finding an Outlet.