Digital Trends in Regional Banking

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Part
01

Digital Trends in Regional Banking - Current

Detailed research reveals that several trends expected in the American banking sector include increased use of big data, expanded partnerships with fintechs, the overhauling of old back-end processes through the use of APIs via fintechs, among other trends. Additional insights into identified trends and how we chose them is as follows.

METHODOLOGY

To gain insights into the digital trends in the regional banking sector of the United States, we researched through Forbes, Fintek news, GoBankingRates among other websites. We chose trends that appeared across several credible sites as those that would make the biggest impact. Although some patterns are specific to the regional banking sector, we covered some trends which seem to be relevant to commercial banks across America due to the scarcity of information on digital trends for regional banks across America.

1. THE USE OF TECHNOLOGY: REGIONAL BANKS ARE BECOMING INVISIBLE

WHAT MAKES IT A TREND

A 2018 Fintek News article reveals that regional banks across America are becoming more “invisible” in how they deliver their services taking advantage of technology. The article goes further to reveal that technologies such as ATMs will be behind the increase in bank invisibility. In fact, it has been reported that that American banks are increasingly losing their brand awareness and becoming invisible. The implication is that more consumers will be accessing financial services without having much contact with the brand. Cardless ATMs, which are considered the next big innovation in the industry, will further make regional bank brands more invisible as users tend to be even more mobile. Moreover, this invisibility is reinforced by the increasing deployment of call centers, cash deposits, and checks which would further increase the number of people that will perform transactions without visiting their specific banks.

ROLE OF TREND BETWEEN REGIONAL BANKS AND THEIR CUSTOMERS

Physical contact with brands is reduced with the advancement of technologies such as cardless ATMs and mobile banking because traditional over-the-counter relationships that give rise to a higher brand awareness will continue to wane.

2. INCREASED PARTNERSHIPS WITH FINTECHS

WHAT MAKES IT A TREND

According to Forbes, there is strength in numbers as many American community banks are joining forces with regional banks to navigate the ever-increasing digital world and bring fintech to consumers. In fact, a new wave of fintech companies are making important partnerships with traditional banks to enhance the banking sector customer experience through blockchain, artificial intelligence (AI), cloud, and mobility.

ROLE OF TREND BETWEEN REGIONAL BANKS AND THEIR CUSTOMERS

Through partnerships with fintechs, regional banks also increasingly changing the landscape of the finance industry through blockchain, artificial intelligence (AI), cloud, and mobility. These partnerships give banks an ability to gain additional insights into customer demographics thereby improving services. Big data also enables organizations to target their niche areas easier.

3. INCREASED USE OF MOBILE AND DIGITAL BANKING

WHAT MAKES IT A TREND

A 2018 GlobalBankingRates article reveals that the use of mobile and digital banking across all banks in America will be on the rise. Banks (including American regional banks) are investing heavily in new digital banking technologies, through which customers use a mobile, web or digital platform for banking services. In fact, a 2018 American Banker article reveals that several regional banks are spending millions on improving and upgrading their mobile apps and competing with the largest banks such as Erica, Bank of America’s mobile chatbot. Large banks like JP Morgan also have mobile banking solutions for millennials.

ROLE OF TREND BETWEEN REGIONAL BANKS AND THEIR CUSTOMERS

Banks are recently using the mobile, web or digital platforms for banking services to give customers enhanced satisfaction. Artificial intelligence is enabling solutions such as chatbots, to often assist customers in simplifying tasks such as making of payments which increase user experience.

4. OVERHAULING OLD BACK-END PROCESSES THROUGH API AND FINTECHS

WHAT MAKES IT A TREND

Regional and commercial banks are overhauling old back-end processes through digitization while leveraging on data analytics and automation aimed at streamlining operations. Through Application Programming Interfaces (APIs), banks will connect with third parties, including fintechs, for purposes such as collaboration. Long-standing customer challenges, slow payments and settlement cycles as well as complex and paper-based trade finance processes will be made easier.

ROLE OF TREND BETWEEN REGIONAL BANKS AND THEIR CUSTOMERS

The overhauling of old back-end processes through digitization while leveraging on data analytics is streamlining operations and improving customer experience. Through the use of Application Programming Interfaces (APIs), are now increasingly connecting with third parties including FinTechs to solve long-standing customer challenges, slow payments and settlement cycles as well as complex and paper-based trade finance processes are becoming eliminated.

5. INCREASED USE OF BIG DATA ACROSS AMONGST AMERICAN REGIONAL BANKS

WHAT MAKES IT A TREND

According to a recent FinTek News article, for the first time in several decades, the banking industry has recently been consolidated using critical data in real time. Big data is driving transformation in the area of customer experience, security, and efficiency. Predictive services, robo-advisors, including AI driven chatbots applications in banking will continue to grow. In fact, more 53% of companies, including banks, are adopting big data for analytics. Detailed research reveals that some American banks that build, utilize or test big data and analytics through artificial intelligence include the Bank of America, Wells Fargo, JPMorgan Chase, CitiBank, the U.S. Bank, among other regional banks.

ROLE OF TREND BETWEEN REGIONAL BANKS AND THEIR CUSTOMERS

Big data technology involves the use of analytics in improving the predictive power of risk models and exponentially improving system response times and effectiveness. Big data provides more extensive coverage of risks, and generate significant cost savings by providing more automated processes, more precise predictive systems, and less chance of failure. Risk teams using bid data can gain an accurate risk intelligence from a variety of sources in real-time.

Part
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Part
02

Digital Trends in Regional Banking - Predictions

Vikram Pandit, former CEO of Citigroup predicted that within the next 5 years, about 30 percent of banking jobs would be unavailable due to benefits offer through Artificial Intelligence such as compliance customer experience, rapid product delivery, risk management and marketing, fraud detection, and customized financial service. All the predictions stated below were selected based on the year range they fall into (2020-2024) to meet the research criteria. Below are the details of our findings regarding the research request.

1) ARTIFICIAL INTELLIGENCE (AI)

More effective banking operations through Artificial intelligence (AI) is one of the anticipated development in the banking industry. AI has been touted as the next great breakthrough that will change the way banking and financial transactions being conducted. AI has various benefits to offer banks and credit unions such as compliance customer experience, product delivery, risk management and marketing, fraud detection, and customized financial service. Vikram Pandit, former CEO of Citigroup (an American multinational investment bank and financial services' corporation) predicted that within the next five-years, about 30 percent of banking jobs would disappear within due to the rapid developments in technology.

2) BLOCKCHAIN TECHNOLOGY

Blockchain technology is one of the innovations in the banking industry set to transform banking and financial services. Blockchain enhances safety in data storage and "transmutation," and also help in reducing the costs involved in operations. These remarkable attributes make blockchain a very promising and "in-demand solution" to various industries. This technology takes a decentralized approach and therefore eliminates third parties which consequently services will be available to clients at greatly reduced prices. Blythe Masters, former CEO of Digital Asset Holdings, (a financial technology firm developing distributed ledger technology for wholesale financial services) predicted that Blockchain technology will have an enormous impact in improving various bank facets through optimization of assets, management of cash and a variety of other business processes. It was also added that Blockchain technology will increase efficiency, speed, security, and lower costs in financial transactions.

3) MOBILE AND DIGITAL BANKING

Easy banking and effective banking operations through mobile and digital banking are one of the anticipated development in the banking system in the banking industry. Banks are investing heavily in digital banking technology to utilize and provide effective services to customers. In a Forbes survey on banking customer engagement, it was reported that 86 percent of banks indicated that mobile and digital banking is one of their top technology investments. Catherine Lynch, Head of Digital Banking predicted that there will be more innovations in the banking industry which will further aid effective banking, easy accessibility of financial services and data.

4) EXPANDED ATM CAPABILITIES

The next predicted development in ATMs operation is the involvement of contactless payments. Visa CEO predicted that contactless ATM transactions using a smartphone will be a reality. It was added that contactless payments will help to increase the speed in making payment and in performing financial transactions. According to the study from Chase and Braun Research, 70 percent of the respondent make use of ATM to view account balances and transactions. Nearly half (46 percent) make use ATMs to transfer money from one account to another and 64 percent use ATMs to deposit checks.

5) ROBOTIC PROCESS AUTOMATION (RPA) AND APPLICATION PROGRAMMING INTERFACE (API)

Robotic process automation (RPA) has helped banks and credit unions in increasing speed of business growth by executing "pre-programmed rules" across a range of "structured" and "unstructured data." David Solomon, Goldman Sachs bank CEO predicted that more innovations in imploring RPA and API into banking operations will help in reducing the cost of administrative and regulatory processes by at least 50% and also improve the quality and speed of service delivery. It was also believed that Robotic process automation in banking will help in simplifying compliance by keeping detailed logs of automated processes, automatic generation of reports, and eliminating human error.





Sources
Sources

From Part 01
Quotes
  • "Invisibility: Banks are losing brand awareness and becoming invisible as consumers can access financial services without knowing the brand. While a growing number of banks have acquired fintechs to avoid fading into the background (CB Insights reported that 2017 saw more acquisitions by top U.S. banks than any other year), what banks need to realize is that ownership over a product, service or customer relationship is not a prerequisite for commercial success."
Quotes
  • "Big Data technology can improve the predictive power of risk models, exponentially improve system response times and effectiveness, provide more extensive risk coverage, and generate significant cost savings by providing more automated processes, more precise predictive systems, and less risk of failure. Risk teams can gain more accurate risk intelligence from variety of sources in nearly real-time."