Office Spaces for Fintech Companies
One of the key trends in the Banking Industry is increased collaboration. This has made it more important than ever before for teams and organisations to work in shared spaces.
By renting private offices, enterprise offices, as well as serviced offices, banks are more likely to meet fintech and non-fintech companies who will help banks further digitalise and innovate the services in their lineup.
Key Developments in Banking
The banking industry dates back to 2000 BC. It is one of the oldest industries in the world today and it managed to survive through the centuries due to its adaptability to consumers’ changing needs. As technology becomes increasingly advanced and with Covid-19 disrupting economies worldwide, the banking industry is pressed to keep up with the rapidly changing financial landscape in the new normal.
1. Digitalisation and Cashless Transactions
Before the pandemic, digitalisation was a trend. Since the pandemic, digitalisation has become essential.
Cashless transactions are the new normal. Tech firms have become banks’ biggest competitors since the pandemic started. Though online banking existed even before the pandemic, banks’ traditional approach to finance makes them slower to change whereas tech firms are agile and ready to accommodate consumers’ needs in this new normal.
In the Asia-Pacific, tech firms like Alipay, Tencent, and Paytm are using data to venture into financial services, a domain long dominated by banks. Aside from cashless transactions, these tech companies are also providing other services such as insurance and microlending.
To remain relevant in the new normal, banks in the Asia Pacific are investing in digital branches in high consumer traffic centres. They’re also working with the latest technology to provide self-service facilities and enhance in-branch services to improve their customer engagement.
2. Open Banking & Cloud Technology
Banks have always functioned with a closed vault model. Banks are very private, working internally and focusing only on the products they offer. This is going to change in the new normal. The banking ecosystem is going to be increasingly open, innovative, and collaborative.
Through API and cloud technology, banks are becoming more connected, data-driven, and customer-centred. More than ever before, digitalisation is requiring banks to collect more data from customers. API and innovative cloud solutions will pave the way to open banking, characterised by real-time processing, personalised services, and heightened safety and security.
Banks will also improve data management through blockchain technology. Blockchain is no longer going to be used solely for cryptocurrency, they will also help banks provide more secure and easily verifiable transactions. Blockchain will promote transparency during payments and currency exchange, forever changing the way banks operate. This eliminates the need for third parties in loans and credit systems, which will reduce interest rates and minimise costs for consumers overall.
3. Artificial Intelligence
Another challenge banks face in this age of digitalisation is improving their customer experience. One of the best ways to do this while minimising costs is through the use of AI technology.
AI allows banks to have quicker and more secure customer onboarding. AI analyses customer data and makes sure all loopholes are plugged. AI also automates the analysis of multiple customer documents for sufficient and accurate binary decision making.
In the new normal, banks will be adapting AI to improve their fraud detection and prevention procedures. Moreover, AI in the form of natural language processing (NLP) will also be integrated to provide high-touch chatbots that will enhance online conversations and personalise customer experiences.
Moving forward, chatbots will become increasingly advanced as well. They will soon offer personalised financial tips and assist customers at any point in their banking experience.
4. Tighter Cybersecurity
In 2019, the malware was responsible for 75% of all data breaches in the banking sector. With the shift from physical transactions to online banking, banks are faced with even more cybersecurity issues.
Banks are handling high-value financial data on a daily basis and they are increasingly targeted by cybercriminals to steal customer banking credentials. Additionally, as banking relies more heavily on mobile applications, cybercriminals have started targeting clients, servers, and third-party vendors, posing more challenges in terms of cybersecurity.
This requires banks to ensure that data is secure when it is being accessed from a customer device, when it is stored on bank servers, and when vendors are accessing critical banking data.
Since 2020, banks have tightened their cybersecurity, incorporating multi-factor authentication (MFA) which rely on passwords, pins, or fingerprints. They also started performing cyber risk assessments to help organizations identify and manage vulnerabilities within their network environment as well as to streamline threat mitigation.
There’s also been an increased demand for cyber insurance to help cover legal expenses as well as provide protocols for damage control in case of a data breach. And lastly, banks are conducting more thorough employee training not only within their teams but also in partner organisations to help ensure the effectiveness of their security programs and to help eliminate points of exploitations within their systems.
5. The Rise of Fintechs
While traditional financial services companies and banks used to perceive fintech as competition, there’s been a shift towards collaborative action between the two in recent years. This helps bridge the gap between banks’ inability to digitise and fintech companies’ need for further marketing, administration, and financing to have a wider reach and offer better services like loans and benefits. (SEE: 5 Key Developments in Financial Services)
To cope with the rapidly changing financial services industry, banks will be entering into more collaborations with fintech and non-fintech companies. In 2021, large banks in the Asia Pacific are partnering up with technology companies in a move to increase innovation. Some examples of new technological advancements in banking that resulted from such collaborations are facial scanning technology, hologram machines, chatbots, and voice recognition.
Similarly, smaller fintech companies will be partnering up with banks, lending larger institutions their software in exchange for broadening their customer reach and optimising their services for faster and better financial services.