Smart Banking: Innovations Driving the Future of Finance
In today’s rapidly evolving financial landscape, the concept of smart banking has become increasingly important, writes Louis Thompsett for the Fintech Magazine. With the integration of technological advancements, both at the front and back ends of operations, smart banking has transformed traditional banking practices. But what exactly defines smart banking in 2023, and how can legacy banks keep pace with this new wave of innovation?
Louis Thompsett explores the characteristics that distinguish smart banks from their traditional counterparts. While the term «smart banking» lacks a singular source of origin, it broadly encompasses the use of technological processes to enhance banking services. From the introduction of the pantelegraph in the 19th century to the digital transformation of banking in the 2020s, innovation has been a constant driving force behind smart banking.
David Titterton, Engagement Director of Banking, Insurance, and Financial Services at Monstarlab, points out that intelligent banking is defined by high levels of automation, personalization, and user-friendly products and services. He emphasizes that these characteristics should be prevalent not only in customer-facing processes but also in the back office. Titterton highlights the importance of well-designed, data-driven processes that enable seamless interactions between customers and banks.
Natasa Kyprianidou, Senior Director of Financial Services at Publicis Sapient, identifies several services and technological innovations that distinguish smart banks. These include mobile banking, digital onboarding processes, mobile super wallets, hyper-personalized interactions, faster loan decisions, real-time transaction processing, biometric authentication, and the implementation of blockchain technology. Additionally, Kyprianidou mentions the role of conversational AI in rendering banking services through natural conversations across various channels.
Legacy banking institutions face a significant challenge in keeping up with the rapid pace of fintech and smart bank innovation, according to Kyprianidou. To remain relevant, these institutions must not wait before implementing smarter banking practices. Steve Morgan, Global Banking Industry Market Lead at Pegasystems, suggests that legacy banks can close the gap by incorporating smart processes and intelligent automation into their operations. By leveraging low-code tools and generative AI, legacy institutions can enhance their agility, streamline processes, and provide better customer outcomes.
While legacy banks strive to catch up, challenger institutions are already exploring the next phase of innovation. Pavlo Khropatyy, Vice President of Delivery and Head of Financial Services & Insurance at Intellias, believes that the gamification of smart financial services will play a crucial role in driving customer engagement. By leveraging customers’ desire for fun, entertainment, rewards, and competition, gamification can enhance the banking experience and appeal to tech-savvy millennials and Gen Zs.
The article concludes by highlighting the dynamic nature of smart banking. As legacy banks adopt smart banking technologies, fintechs and smart banks must remain at the forefront of innovation. Smart banking is not a static concept but continuously evolves to incorporate the latest technological advancements. Whether it’s gamification or banking in the metaverse, staying one step ahead of established banking practices is crucial for smart banks and fintechs.
Louis Thompsett explains, «Smart banking is only ‘smart’ so long as it sits at the apex of technological innovation in the industry.» Therefore, both legacy banks and smart banks must strive to keep up with the ever-changing landscape of finance to meet the demands of tech-savvy customers and stay ahead of the curve.