The banking and financial services sector is focusing on innovation to prepare for a future where technology will be increasingly important. As many financial institutions deal with economic uncertainty, a restrictive regulatory environment, fierce competition, technology-driven disruptions, and updating legacy processes to meet changing customer requirements, improving Return on Equity (RoE) has received a lot of industry. However, as more and more financial institutions reinvest savings from efficiency measures and strategic cost programs into investments, notably in technology, banks are placing a new emphasis on innovation.
The upcoming trends can be discussed in brief as follows:
Digital Transformation:
To improve operational efficiencies and provide improved client experiences, the sector focuses persistently and aggressively on digitalization and using new and emerging technologies. Banks invest in self-service digital channels as clients increasingly choose mobile and online banking. With the computing power of smartphones built into wearable technology, banks are increasingly able to provide consumers with customized services.
The emergence of E- Cheques:
This US-developed technology will take the place of traditional paper checks in India. A negotiable instruments act has been added to the amendment to incorporate E-cheque and make it mandatory.
Development of Cognitive side:
The BFS sector is already experimenting with various applications of AI in their daily work. Banks are seeing the dual benefits of cost optimization and operational improvement, from deploying AI to power chatbots and offering round-the-clock, agile customer support to employing the technology for important tasks like anti-fraud and regulatory compliance.
Electronic Clearance Service ( ECS):
Bulk electronic payments and receipts are generated using a system called ECS. The payments must be repeated and of a comparable kind, even if they are less in quantity. Therefore, this capability is especially useful for government organizations and businesses that send or receive substantial amounts of money in bulk.
FinTech Companies:
Many banks are attempting to take advantage of the possibilities offered by digital, either by utilizing the technology internally or by collaborating with FinTech firms. At first, these businesses were viewed as rivals exploiting the gap left by the BFS sector’s inability to keep up with technology advancements. However, collaborations between banks and fintech companies are becoming more common. The latter offers marketing, management, loan servicing, and other services to enable banks to provide tech-enabled banking products. Other benefits of cooperation between banks and fintech companies are also coming to light for banks, such as access to resources and clients. As a result, these collaborations are starting to transform the financial services industry.
BNPL:
The idea of Buy Now Pay Later [BNPL] has completely changed the Indian banking industry with the growth of fintech firms. Banks know how crucial it is to use this idea well to enhance client satisfaction and foster a good attitude. The practice of banks providing their customers with the required credit in interest-free or spaced-out interest-bearing payments is currently regarded as the new type of consumer lending.
