Digitalization of banking
The banking industry has undergone significant changes over the last twenty years. The emergence of new technologies and mobile devices, coupled with improvements in connectivity and high-performance computing services, produced a new commercial ecosystem capable of hosting most of the traditional market operations.
The digitalization of banking is a continuous process in which new digital resources and solutions for management, customer service and marketing processes, among many others, were gradually added. The accessibility of different types of operating systems and commercial alliances with technology companies favored its implementation.
However, at the time, most of the improvements and technologies implemented were disruptive and were considered secondary by industry players. Indeed, before being implemented by the banking sector, most of these technologies were developed independently in other areas.
Disruptive technologies: Digital transformation in banking
Currently, this sector is undergoing a comprehensive transformation of its structures and business models, mainly oriented towards online presence and investment in technological development. According to the MPIx report conducted by Smartme Analytics, during 2021 the use of digital banking applications perceived an increase of 24 points, bringing the total to 84.5% of the Spanish population.
At the same time, the consulting firm Gartner warns that the transition to digital services represents a competitive attribute, as it allows to reduce operating costs by 30% and improve the performance of work processes in general. The same is true for the automation of operations and machine learning. According to the Bank of Spain, these technologies represent an improvement in the control of financial credit risk: between 12% and 17% savings.
The most disruptive technologies in banking
The digitalization of banking is an evolving process. It was accelerated during the pandemic, when society at large was forced to migrate to digital for an extended period. Remote management and digital solutions facilitated the transition through the following disruptive technologies that changed banking.
While we mentioned the effects of the technologies that transformed the banking industry, the characteristics of these technologies and their impact within the industry deserve a closer look. Precisely for this reason, the following list includes the most disruptive technologies that have changed banking.
Digital payment methods
One of the first breakthroughs in the process of transition to the digital banking environment were the payment methods that conveyed the ability to make valid and secure digital transfers.
This includes companies such as PayPal, one of the first to succeed, but also the various computer architectures developed from its model: NFC technology and QR codes turned mobile devices into electronic wallets, while companies such as Google and Apple introduced the first digital payment cards.
Big data and databases
This information technology is essential for the provision of high-performance digital services, as it allows improving market segmentation and creating better user profiles, the types of operations they usually perform.
Its gradual and progressive development is essential for managing databases and founding open banking: the exchange of financial information with third-party providers and payment methods. Today, it represents one of the most important areas of development in the sector with the PSD2 Payment Services Directive and the application programming interfaces or APIs.
Artificial intelligence systems
In this case, it is an advanced computer technology that significantly improves the performance of banking systems and personal management operations. It is therefore indispensable for managing the current volume of operations.
This is achieved by creating algorithms based on database processing, which gives these systems the ability to solve problems and perform tasks automatically. Artificial intelligence, limited for the time being, makes it possible to maintain efficient and economical process management.
Internet of Things
Finally, this development involves both computer and electronic technology. Indeed, it combines programming and the creation of reduced operating systems for devices and appliances of different types.
The so-called internet of things brings together a series of elements to take advantage of the connectivity of devices to the internet. This connectivity has security protocols that guarantee the legitimacy of operations and transactions carried out by consumers, facilitating the use of banking services and online account management.
The banking sector is undergoing a significant transformation process. However, this would not have been possible had it not been for certain technologies that changed banking and set the current digitalization standards.