As the banking, financial services, and insurance (BFSI) industries strive to become more technologically savvy and future-proof, it is critical to consider the advancements that may emerge in 2022.
Following the Covid-19 outbreak, banks and financial technology companies (FinTechs) have been hard at work re-evaluating their operations and strategy in order to serve their clients at lower costs better.
Therefore we have listed the top six projected trends that banking and FinTech organizations are likely to embrace in 2022 to overcome obstacles in the sector, according to The Economic Times India.
Commercial banking customers now demand the same level of service that they get from their retail banking institutions. Accordingly, many bankers are already acknowledging that hyper-personalization is the future of the financial services industry as a whole.
When Ashwini Kumar Tiwari, managing director of State Bank of India, spoke at the second edition of the ET BFSI Converge conference in November, he said:
“Hyper Personalisation is a journey that all financial institutions must make because the pandemic-induced digital transformation has led to customers being more inclined towards digital solutions that help customize choices.”
As a result, the banking and Fintech industries will likely either compete or cooperate to give their clients hyper-personalized experiences.
2. Updated banking platforms
Digital transformation initiatives, including application modernization and cloud computing, as well as the API-fication (application programming interface) of present services, are also being examined by banks using core banking systems to assist with digital transformation activities. In particular, banks will concentrate their efforts on establishing real-time, on-the-go, and at-any-time services.
3. Open Banking: Data sharing
Data exchange has grown both simpler and more vital since the advent of the digital revolution. In order to exchange data, the data collected must be distributed to those who may need it for a variety of objectives.
Application programming interfaces (APIs), which serve as a link between financial institutions, such as banks, and FinTechs, allow data created by these institutions to be exchanged with them. APIs make it possible to share data more easily in the financial industry, resulting in the notion of “open banking.”
It was announced this year that the Account Aggregator (AA) architecture would be implemented, which would serve as a data-sharing system that will also allow simple access to financial data to different partners in the financial ecosystem.
Individuals and small enterprises alike have benefited from the establishment of AA, which is projected to close the credit gap, as a result, lenders will be able to undertake a simple and quick evaluation of the borrower’s creditworthiness.
4. Banking-as-a-Services (BaaS)
Financial services may now be delivered more cheaply and efficiently via the use of open banking platforms and services known as “Banking as a Service” (BaaS).
When it comes to creating new and creative digital services, banks must use a service-oriented and composable/modular architecture approach. Traditional banks and financial institutions’ digital transformation plans must include BaaS as a key part of their strategy.
5. Major consolidations
It is possible that there would be significant consolidation in the neo-retail banking sector as there are many of these banks offering one or two services which may lead to unsustainable growth, therefore its possible they’ll attempt to combine or consolidate to accelerate their development trajectory.
Furthermore, in order to address inefficient parts of the ecosystem and provide better services and client experiences, big banks will likely cooperate with FinTechs to upgrade their offerings.
6. Embedded Finance
Embedded finance or embedded banking refers to the process by which financial services are smoothly incorporated into a non-financial service. Since banks are best equipped to manage regulatory, compliance, and credit risk they can employ their network and human resources to monitor and service loan requests from the Embedded Finance ecosystem, which includes FinTech companies that build end-to-end software tools (APIs and SDKs) that connect financial institutions to digital platforms.