Fintech 3.0 – The Revolutionary Impact of Technology in Banking

Open banking stands out to be the game-changer in the banking sector’s digital transformation due to the API innovations driven by the rise of fintech-bank collaborations. Some of the innovations enabled by opening the APIs of banks to third-party providers (TPPs) are automated onboarding, smart budgeting, account aggregation, automated accounting, and credit risk assessment. Digital-only banks are increasingly the preferred route for banking, predominantly among millennials because of their strong attachment to smart devices. Contactless payments have garnered significant traction during the COVID-19 pandemic as an alternative to carrying out electronic funds transfers at the point of sale. Moreover, banks are exercising to unleash the power of digital technologies such as deep learning to predict and prevent a cyberattack even before it happens.

Key Use Cases of Technology in the Banking Sector Value Chain

Digital technologies have enabled a massive transformation of the banking sector with a growing number of innovation use cases across the value chain. The key fintech value chains are channels, products & services, operations, and infrastructure.

Channels: Some of the key use cases of digital technology channels in banking are crypto ATMs, robo-advisory, smart ATMs, social banking, and video banking. With the advent of emerging technologies like AI, IoT, and blockchain, banks are replacing traditional channels with digital to reach, connect, and engage more customers and reduce costs. Digital channels are enabling banks to increase customer touch points and offer tailored products and services from anywhere. Startups are active in launching crypto ATMs to improve the mass adoption of cryptocurrencies among the general public. These ATMs are internet-connected kiosks that allow customers to purchase digital currencies like Bitcoin and/or other cryptocurrencies with cash.

Products & Services: Some of the key use cases of digital technology products & services in banking are contactless payments, crypto payments, digital-only banks, identity management, and POS lending.   Banks and financial institutions are gradually replacing their traditional products and services with digital to help customers manage their banking activities from anywhere using a smartphone. Contactless payments have emerged as an essential solution for both customers and businesses. Moreover, the COVID-19 pandemic has accelerated the shift from cash to digital and caused a surge in the demand for contactless payments. 

Operations: Emerging technologies are helping banks and financial institutions to modernize and automate their internal operations to meet customer demands, identify fraudulent activities, and improve

overall compliance. Some of the key use cases of digital technology operations in banking are anti-money laundering, compliance management, credit assessment, customer engagement, and customer onboarding. Banks are increasingly using digital channels like websites, apps, and social media to connect and engage customers. Improving brand loyalty across digital channels is the key to success as the competitive landscape is more challenging than ever. 

Infrastructure: Some of the key use cases of digital technology infrastructure in banking are API management systems, banking as a service (BaaS), cybersecurity, and hyperconverged infrastructure. Banks are increasingly replacing their legacy banking infrastructure with cloud-based technologies to reduce downtime and maintenance costs. The transformation also helps them to bring the latest digital products, services, and applications to customers quickly. Open banking enabled by API management systems is seen as a transformative change in the banking sector helping banks with real-time integration of data from multiple systems and automating various repetitive tasks and finding opportunities to improve service offerings.

Key Use Cases of Technology in the Banking Sector Value Chain

For more insights on key use cases of technology in the banking sector value chain, download a free report sample

Fintech Market Report Overview

Scope

• Theme Exposure Map: presents the top themes impacting the sector over the last three years compared to other sectors.
• Patent Filings Chart: displays the top ten themes in the sector with the highest number of patent filings over the last three years.
• Innovation Map: key real-world innovation use cases of emerging technologies implemented by enterprises and startups in the sector.
• Innovation Insights: innovation examples by each value chain segment of the sector to present key trends.
• Vendor Map: represents a sample list of vendors in each use case highlighted in the report.

Reasons to Buy

• No surprise that technology has been a driving force in business transformation for years, but the term ‘emerging technologies’ has all of a sudden became the key catalyst to drive the next wave of innovation across sectors.
• The sense of urgency weighs different across different sectors, where the direct customer-facing sectors are at the forefront compared to other capital-intensive sectors. Companies in one sector can take cues from successful innovations in other sectors to either draw analogies with existing products, services, and processes or transfer strategic approaches for a revolutionary transformation.
• Against this backdrop, enterprises need to understand which emerging technologies are impacting their sector and how various companies are implementing them to meet various challenges. The innovation landscape report in banking & payments, published by GlobalData as part of an ongoing series, covers some of the key trends, use cases, and real-world examples related to the implementation of emerging technologies across the banking & payments sector value chain.