New Digital Technologies Will Disrupt Banking Forever

New technologies like artificial intelligence, blockchain, the Internet of Things, open banking APIs and robotic process automation will rock the banking ecosystem down to its very core, disrupting the way people bank and the manner in which institutions deliver financial services.

Subscribe TodayOver the past several years, digital technologies have changed the once staid banking industry. The collection and advanced analysis of data has changed the way customers are viewed, and the introduction of mobile devices has altered the way consumers access their bank. In short, digital transformation is on the front burner of all banks and credit unions.

At a time when most organizations are still playing catch-up, a new wave of digital technology has the potential to change the way organizations deliver banking services even further. These new technologies include artificial intelligence (AI), the internet of things (IoT), blockchain, open banking platforms with application program interfaces (APIs) and robotic process automation (RPA).

With the potential to increase efficiency, decrease costs and enhance the customer experience, these digital-enabled technologies will result in disruption of the way people do their banking and potentially what organizations deliver these services. We are already seeing organizations testing many of these digital technologies, hoping to win the battle to become the ‘bank of the future.’

( Read More: The Banking Industry Can’t Keep Up With Emerging Technologies )

The Evolution of Banking

For decades, the banking industry was based on branch-based and mainframe-supported operations, that focused on the efficiency of processing transactions in person, at ATMs, on the phone and with plastic cards. Relatively recently, the impact of digital technology has moved banking transactions out of the branch and on to mobile devices, with advanced data analytics allowing for personalized delivery of services.

The pace of digital change is about to accelerate exponentially, however, with the integration of AI, robotics, blockchain, open banking APIs and the internet of things. The smarter use of data, combination of non-financial and financial solutions, and new, real-time delivery alternatives could significantly change the entire structure of banking, according to a white paper from Cognizant.

We are already seeing multiple tests of all of these technologies to different degrees across the industry. While just scratching the surface of potential, these tests are important to keep pace with consumer expectations.

  • AI and Machine Learning: Organizations are testing the use of chatbots to improve customer service, while machine learning is being used to decrease fraud and improve personalization.
  • Robotic Process Automation: Alerts and notifications are being automated with RPA.
  • Internet of Things: Mobile device geolocation is increasingly being used for enhanced credit/debit card security, with firms also testing the use of voice-first digital assistants to conduct transactions.
  • Blockchain: Blockchain technology is being used by many firms for secure document transfer and to reduce settlement costs.
  • Open Banking APIs: Several traditional banking organizations are partnering with non-traditional providers to offer expanded banking services.

( Read More: The Use of AI in Banking is Set to Explode )

Building the ‘Bank of the Future’

The impact of new digital technologies will be felt across the entire banking value chain, impacting the competitive structure and the ways people bank. More than ever, the transaction-based component of banking will be commoditized, with differentiation achieved through the personalized experiences provided the consumer.

While the cost structure of delivery will need to be minimized, winners will be those firms that can bring together the new digital technologies in a way similar to what consumers experience from non-financial firms. This will become increasingly important as the financial needs of digital generation expand with age.

According to Cognizant, the winners in this battle will be characterized by the following:

  • Orchestrator of Personalized Customer Journeys: Using expanded data and traditional and non-traditional solution sets to manage experiences contextually and across channel touchpoints.
  • Aggregator of Capabilities across Banking Ecosystem: Delivering highly custom solutions from across banking ecosystem including fintechs, tech firms, and other banks and non-banking organizations through open APIs.
  • Provider of Platform-Based Offerings: The bank of the future will be platform-based, with high levels of front and back-office digitalization to allow for agility, rapid innovation and real-time insight.
  • Intelligent Processor of Expansive Data: Using AI and machine learning from transactions, behavioral data, etc. to ascertain future customer needs and intent and deliver customized solutions.
  • Provider of On-Demand Offerings: Eliminating on-premise systems dependency, using the cloud to improve agility, flexibility, etc.

One of the keys to delivering in the new digital banking ecosystem will be the elimination of internal silos. Not only is this required for improved data analytics, but is important when trying to deliver customer- as opposed to product-centric solutions. It is important to combine the best of internal capabilities with the best of what is offered outside the bank or credit union – which is only possible with an integrated perspective.

( Read More: Digital Banking Success Requires a Cultural Shake-Up )

Importance of the Human Touch

Despite the shift to digital technologies, a human touch will still be highly desirable for consumers. According to Cognizant, “A well-thought-out framework will be necessary to determine the right balance between human and machine intelligence.”

As opposed to an overnight change in the way people do their banking, the channels organizations deliver financial solutions, and the organizations that are competing for business, there will be incremental changes based on the investment required and value received. Organizational culture around innovation and change will determine the leaders, with the consumer being the ultimate winner.

In the end, the banking ecosystem will most likely expand significantly to include both traditional and non-traditional financial services. This expansion will lead to greater competition (and cooperation) between existing and new players.

Jim MarousJim Marous is co-publisher of The Financial Brand and publisher of the Digital Banking Report, a subscription-based publication that provides deep insights into the digitization of banking, with over 150 reports in the digital archive available to subscribers. You can follow Jim on Twitter and LinkedIn, or visit his professional website.

This article was originally published on August 21, 2017. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.


  1. The new digital technologies are already disrupting the banking industry. The truth is, these technologies should not be projected towards the future, everything is available now. The reality we see today (at least the ones closer to this matter) is pretty straightforward – those who “get disrupted” now will gain great competitive advantages in the years to come.

  2. In the banking industry, robotic process automation brings promises of growth to finance and accounting, sourcing and procurement, regulatory and compliance, financial risk management, and cyber risk and resilience. On the dimension of finance and accounting, for instance, RPA tools may be used to calculate asset depreciation, to validate sales orders, or to maintain accounting master data. Robotic Process Automation also has the capacity to examine system logs to identify suspicious or illegal activity, thereby making a significant contribution to cyber risk management. The execution of timeliness, accuracy and comprehensiveness checks, or the performance of hasty remedy actions when required, are cases of RPA use to manage financial risks.

  3. RPA Technology is rapidly reshaping the way banks and financial institutions operate.
    It offers promising business value such as increased security, reduced manual errors, costs, and downtime, increased operational control, and most importantly freed up knowledge workers for customer-facing tasks.
    KPMG estimates that by 2020, Robo-advisors will manage $2.2 trillion in the USA.

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