FinTech in Banking: Technologies Making Banking Easier

Date:

Share post:

FinTech has transformed how banks provide financial products and services to their customers. FinTech in banking enables faster delivery, personalized services, accessibility, and quick resolution of issues, which are the primary demands of the market.

According-to-2023-US-Consumer-statistics-by-Forbes,-78%-of-American-adults-in-2022-said-they-

How FinTech in Banking Helps with a Faster, Simpler way to bank

According to the World FinTech Report by Capgemini, the demand for FinTech use in payments, savings, and other services surged by almost 20% from 2022 to 2023.

Here are a few critical areas where FinTech apps add tremendous value to the banking industry. This is where they will continue to make banking easier in 2024:

  1. Online Lending and creditworthiness assessment Tools

FinTech apps help banks assess the creditworthiness of their customers to support risk-free lending.

  • Online lending tools leverage AI to identify creditworthiness, crunching real-time customer data. They make it easier and more cost-effective for banks and financial institutions to make informed decisions for lending.

The cost of online lending tools is much lower than the cost of working with a human assessment resource. Banks can pass these savings to customers as discounts or reduced fees for loan disbursement.

  • It also enables consumer-friendly lending conditions, like zero collateral and quick request processing, which are advantageous for customers.
  • Using AI tools, banks can also leverage alternative data sources that identify individuals with loan repayment ability and evaluate any individual’s capacity to repay loans. This can help them expand their customer base.
  1. Banking-as-a-service (BaaS) with Smarter APIs

With the advent of banking as a service (BaaS), financial products are now accessible to those who require them most, beyond the confines of the traditional bank.

  • Using an API (Application Programming Interface), licensed and regulated financial institutions and banks can establish a secure connection with the embedded financial services of non-bank entities. This connection facilitates uninterrupted communication.
  • The customer does not need to visit another bank website to obtain financial services such as loans, payments, product financing, credit cards, or digital wallets.
  • The BaaS model enables non-bank FinTech and other third-party providers (TPPs) to incorporate financial services into their business model offerings. These partners connect to a bank’s infrastructure system via API integration with the licensed bank or middleman FinTech software company as a BaaS provider.
  1. Identity Decisioning Platforms

An identity decisioning platform (IDP) automatically handles identity and risk verification throughout a customer’s lifecycle.

IDPs enable smart decisions that reduce business risk while providing a frictionless customer experience for ongoing transaction monitoring, identity verification and onboarding, and credit underwriting.

Also Read: How Fintech Has Modernized Banking Solutions

  • Using IDPs, banks can decide whether to approve or reject applicants through the account opening platform.
  • It provides underwriting decisions and supervises the client’s account activity. IDP connects to several different data sources through application programming interfaces or APIs. This way, banks can add or remove data sources as needed.
  • By consolidating identity and risk decisions into a single platform, firms can gain a complete picture of their customers and automate more decisions.
  1. Embedded Finance

Embedded finances about the incorporation of financial services into non-financial offerings. For instance, a credit card can offer discounts for shopping at a retail mall.

Among the most notable FinTech in banking innovations are new credit cards with enhanced cashback reward schemes or expedited loan approval procedures.

Embedded finance sits at the intersection of technology and banking. With embedded finance in cards, banks provide credit services and customized offers.

  • Efficient embedded finance solutions provide the client with a financial alternative at their current stage of development, such as a loan, payment program, insurance policy, or streamlined payment process.
  • Some embedded financial services, such as airline credit cards, car rental insurance, and high-priced item payment plans, have been around for quite some time.
  • Embedded finance is gaining traction online, as e-commerce retailers offer banking services directly on their websites rather than redirecting customers to a bank.
  • Through API integrations, third-party ‘banking-as-a-service’ companies embed financial services into non-financial companies’ user experiences.
  1. Functions powered by AI and Its derivatives

The adoption of AI and GenAI in banking is disrupting the banking sector. Given the speed, efficiency, and secure dealings it brings to banking, AUI can potentially deliver massive savings.

According to AI in Banking: How Artificial Intelligence is Driving Innovation and competitive advantage in the Banking Industry white paper in 2019 by Autonomous Next, ‘ AI could potentially result in $1 trillion of cost savings for the banking industry by 2030.

Over the past few years, banks and the FinTech sector have been doing the groundwork for this adoption. Over this time, banks have collected enormous customer data using mobile banking and other digital apps. This has already been the basis for fraud detection, investment advisory, and even creditworthiness assessment of the customers. So what’s new?

Here are some of the evolving, newer use cases that will impact banking in 2024:

  • Automation of wealth advisory and loan documentation: still in its nascent stages, this app will free up human intervention in investment advisory to a large extent. Of course, wealth managers will still need to monitor these apps, but banks will save substantially on their numbers. They could also pass some of this cost reduction to clients as well.
  • It will also be applicable for underwriting and loan assessment, speeding it up, and making it more credible.
  • More Accurate Fraud Detection: AI tools will keep banks and their customers safer, assessing frauds and unauthorized access attempts. It will work on the data the banks already have and the speed of authentication that AI tools will deliver. They will enable predictive assessments and instant shutdown of fraud infiltration attempts.
  • The ability of AI tools to handle vast amounts of data, analyze it for a single entry, and identify fraud, will drive this function. This would be one of the best advantages that AI-based FinTech tools can provide to banks.
  • AI Assistants to Monitor Compliance: With increasing emphasis on regulations and compliances, organizations have a lot on their plate. They need to ensure timely and accurate documentation to meet these compliance requirements.

Banks are particularly susceptible to penalties in case of inability to maintain compliance requirements. AI tools will help banks monitor transactions rapidly, ensuring they meet regulations. They can speed up KYC compliance and identify potential fraud, alerting banks before damage is done. These abilities will support more banks in 2024.

Since AI assistants can monitor large datasets instantly, they will also be adding to the data and transaction security of customers.

  • AI-based Document Management Tools: handling, assessing, and managing large volumes of data to enable loans, investments, and other transactions- is something AI tools excel at. If worked manually, delays, human errors, and even inaccuracies may occur. AI-powered document management tools eliminate these risks.
  • Integrated with Optical Character Recognition (OCR) technology, documents can be digitized and enabled to be machine-readable. Extraction tools can then identify critical points and populate analysis sheets- to arrive at the desired assessment conclusion – and without manual intervention.

These points are by no means exhaustive, and in the new year, the evolution of GenAI, conversational AI and other forms of intelligent automation will definitely throw out more useful applications for the banking industry.

Conclusion

With increasing data privacy and security regulations, banking institutions will need increased support from technologies to comply with them. The emerging technologies and their evolution will be on the lines of what banking customers will demand. Blockchain-based tools, AI-based tools, automation, and even Ml algorithms will deliver more accuracy, efficiency, and agility to the market for banking services.

The list above is by far very much incomplete- the number of FinTech-led services that banks will offer to their clients in 2024, is slated to grow exponentially.

Moreover, the rapid change in market demographics and dynamics will make FinTech indispensable to banking operations. Making it cheaper and smarter will only add to the bottom lines.

This will be true for the entire lifecycle of customer operations in the sector.

Check Out The New TalkFintech Podcast. For more such updates follow us on Google News TalkFintech News.

Source: https://www.forbes.com/advisor/banking/banking-trends-and-statistics/#:~:text=Do%20Americans%20Prefer%20To%20Bank,prefer%20to%20bank%20in%20person.

Swapnil Mishra
Swapnil Mishrahttps://talkfintech.com/
Swapnil Mishra is a global news correspondent at TalkCMO, with over six years of experience in the field. Specializing in marketing technologies, Swapnil has established herself as a trusted voice in the industry. Having collaborated with various media outlets, she has honed her skills in content strategy, executive leadership, business strategy, industry insights, best practices, and thought leadership. As a journalism graduate, Swapnil possesses a keen eye for editorial detail and a mastery of language, enabling her to deliver compelling and informative news stories. She has a keen eye for detail and a knack for breaking down complex technical concepts into easy-to-understand language.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

[tds_leads input_placeholder="Email address" btn_horiz_align="content-horiz-center" pp_checkbox="yes" pp_msg="SSd2ZSUyMHJlYWQlMjBhbmQlMjBhY2NlcHQlMjB0aGUlMjAlM0NhJTIwaHJlZiUzRCUyMiUyMyUyMiUzRVByaXZhY3klMjBQb2xpY3klM0MlMkZhJTNFLg==" msg_composer="success" display="column" gap="10" input_padd="eyJhbGwiOiIxNXB4IDEwcHgiLCJsYW5kc2NhcGUiOiIxMnB4IDhweCIsInBvcnRyYWl0IjoiMTBweCA2cHgifQ==" input_border="1" btn_text="I want in" btn_tdicon="tdc-font-tdmp tdc-font-tdmp-arrow-right" btn_icon_size="eyJhbGwiOiIxOSIsImxhbmRzY2FwZSI6IjE3IiwicG9ydHJhaXQiOiIxNSJ9" btn_icon_space="eyJhbGwiOiI1IiwicG9ydHJhaXQiOiIzIn0=" btn_radius="0" input_radius="0" f_msg_font_family="521" f_msg_font_size="eyJhbGwiOiIxMyIsInBvcnRyYWl0IjoiMTIifQ==" f_msg_font_weight="400" f_msg_font_line_height="1.4" f_input_font_family="521" f_input_font_size="eyJhbGwiOiIxMyIsImxhbmRzY2FwZSI6IjEzIiwicG9ydHJhaXQiOiIxMiJ9" f_input_font_line_height="1.2" f_btn_font_family="521" f_input_font_weight="500" f_btn_font_size="eyJhbGwiOiIxMyIsImxhbmRzY2FwZSI6IjEyIiwicG9ydHJhaXQiOiIxMSJ9" f_btn_font_line_height="1.2" f_btn_font_weight="600" f_pp_font_family="521" f_pp_font_size="eyJhbGwiOiIxMiIsImxhbmRzY2FwZSI6IjEyIiwicG9ydHJhaXQiOiIxMSJ9" f_pp_font_line_height="1.2" pp_check_color="#000000" pp_check_color_a="#309b65" pp_check_color_a_h="#4cb577" f_btn_font_transform="uppercase" tdc_css="eyJhbGwiOnsibWFyZ2luLWJvdHRvbSI6IjQwIiwiZGlzcGxheSI6IiJ9LCJsYW5kc2NhcGUiOnsibWFyZ2luLWJvdHRvbSI6IjMwIiwiZGlzcGxheSI6IiJ9LCJsYW5kc2NhcGVfbWF4X3dpZHRoIjoxMTQwLCJsYW5kc2NhcGVfbWluX3dpZHRoIjoxMDE5LCJwb3J0cmFpdCI6eyJtYXJnaW4tYm90dG9tIjoiMjUiLCJkaXNwbGF5IjoiIn0sInBvcnRyYWl0X21heF93aWR0aCI6MTAxOCwicG9ydHJhaXRfbWluX3dpZHRoIjo3Njh9" msg_succ_radius="0" btn_bg="#309b65" btn_bg_h="#4cb577" title_space="eyJwb3J0cmFpdCI6IjEyIiwibGFuZHNjYXBlIjoiMTQiLCJhbGwiOiIwIn0=" msg_space="eyJsYW5kc2NhcGUiOiIwIDAgMTJweCJ9" btn_padd="eyJsYW5kc2NhcGUiOiIxMiIsInBvcnRyYWl0IjoiMTBweCJ9" msg_padd="eyJwb3J0cmFpdCI6IjZweCAxMHB4In0=" msg_err_radius="0" f_btn_font_spacing="1"]
spot_img

Related articles

PlatOn Showcases Two New On-Chain Payment Methods

PlatON, a digital public infrastructure, showcased its latest advancements in deposit tokenization technology at the Money 20/20 Asia...

Nium Integrates Thredd API Into Its Platform

Nium, a company specializing in real-time cross-border payments, has recently expanded its partnership with Thredd, a payment processor....

Zetrix Foundation To Launch A Virtual Asset Fund

Zetrix Foundation and MY E.G. Services Berhad have signed a Memorandum of Understanding with MaiCapital, a licensed virtual...

Cowbell Introduces Prime Tech with Cowbell Co-Pilot, a Generative AI Solution to Optimize Underwriting Workflows

Cowbell, a leading provider of cyber insurance for small and medium-sized enterprises (SMEs), today introduces Prime Tech with Cowbell Co-Pilot,...