Banking and Finance


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There has been a tremendous shift in how the banking trade is carried out since the start of the art at the sunset of the 14th century. This can be greatly connected to technological advancements across the globe.

Let us not ignore that technological leaps have affected all industries across. Not limited to the financial services. As the norm, the impact of the advancement has been both positive and negative.

This article is not fully a technological evaluation however, I will sample it while evaluating Todays and Tomorrow’s bank. Banking in general was founded based on a saving and borrowing agenda.

These fundamentals have characterized the art of banking since the era of Bardi. Today, these activities are still the key drivers of the industry although they have mutated to create a million value adds.

In a deeper evaluation, the industry has become so much intertwined with the society that it is one of the most vital elements that hold an economy together.

Generally, Economic growth and stability are highly dependent on the soundness of the financial industry. A critical look at yesterday’s bank reveals an industry that was highly mutating but not inclusive.

It was an arena favoring the haves in society. The brick and mortar pursuit of it meant that the branches would only be located in areas, which made financial Sense and not necessarily social sense.

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The approach was bureaucratic, overregulated, and discriminatory especially to the developing markets whose majority of the population was and is still rural.

There were low levels of technological adoption and everybody protected their markets. What these bankers did not realize is that these barriers and practices were creating a big room for disruption prompting Today’s bankers to take the initiative. Today’s bank came around through exploiting the weaknesses and gaps created by the former.

They saw technology as an opportunity rather than a bother. They were more customer-centric and focused all their services on that.

This had a great effect because it was able to capture the majority unbanked and from scratch created new, robust, and tech-savvy institutions that were able to rattle the old folks.

An increased number of institutions, relaxed regulation, and even greater advancement in technology also characterizes this arena. Advent and adoption of the internet and mobile phones created the greatest disruption of all time.

Once these instruments were integrated with the banking experience, it resulted in the complicated customer who was exposed to choice, convenience, and affordability.

The era where the customer needed the bank gave way to an era where the banks now need the customer. The lending business could not sustain these institutions as the industry became more crowded resulting in the re-evaluation of the strategies.

This has resulted in the banks pursuing growth in other income-generating activities and cost-cutting by shifting most services to the technological end, mass layoffs, and offering non-lending services like safe custody, trade finance, and telecom services.

Today’s bank is operating in a highly mutative environment due to the rate of technological change coupled with a well-informed customer.

Policymakers are as well trying to match up with the change resulting in both elements of over and under regulation. The one key thing Today’s bank has achieved is the elimination of the need to build physical branches instead of relying on agents and the Internet to offer the services.

This has greatly improved inclusivity levels enabling financial access to the majority. They have managed to significantly lower the costs associated with enabling the society’s lowest cadre access to the services as well.

In a macroeconomic view, this has enabled more entrepreneurs to access credit spurring economic growth and provided a broader platform in executing the fiscal policies.

On the shareholders front, there has been increased returns while an increase in the number of institutions has spurred job creations in the industry.

You can never fully predict how the future will turn out but from the trend, we can make some assumptions of how we expect the industry to turn up.

There are still key elements to be achieved including banking for all, affordable services, and comfortable regulations. Technological advancement is still an ongoing phenomenon that we expect to continue in the rest of the century.

The majority of the developing interests that will be key I suggest will be Cybersecurity, Artificial Intelligence, Predictive Analytics, and Blockchain.

Cybersecurity has become a key mountain in the room when we talk about the internet. As we all know, Banking is largely emotional and confidence is key.

As the industry embraces the internet, they need to ensure that customer and banks interest are highly secured from the online risks.

Any lapse in this would result in massive cyber theft either of the customers’ information or funds causing huge damages and in extreme closure of business in general.

I trust there will be huge spending on the security departments. This as well triggers the government agencies dealing with such crimes to up their game.

The trend indicates more and more services are being surrendered to the internet making them more vulnerable to cybercriminals. These vulnerabilities have not gone unnoticed.

The internet itself has tried to strengthen its defenses in the last decade giving us a new player known as the blockchain. As we all know, this ledger technology has mostly been associated with cryptocurrencies but to those who understand it, it is being touted as second-generation internet.

The key reason for this is its capability to execute huge transactions, faster and securely. Being a new technology, the adoptability is still low especially in the little developed markets however, when its acceptability increases, it is going to really drive tomorrow’s bank and work hand in hand in strengthening cybersecurity.

This brings me to my third driver, which is Artificial Intelligence. Within the last few years, humans have started developing smart machines capable of interpreting the environment and making decisions.

This is scary to think about however, the future seems to belong to the capability of machines. This is closely related to the fourth element of predictive analytics.

It includes using the intelligence machines to preempt what the customer needs before they even say it. This will help the institutions offer very customized products per customer instead of the current approach, which focuses on groups.

The customer must become the key driver of tomorrow’s bank. This means the banks need to offer end-to-end solutions to their customers in a timely, cheaper, secure, and complete way.

Artificial Intelligence will help drive the data science world making it easier to push predictive analytics. Areas such as marketing, account opening, and product offering must be drilled down to specific customer needs.

This will ensure that that tomorrow’s bank learns from the gaps of Today and help push the industry towards an even further unpredictable future. What are your thoughts on this? Let me know in the comments section below.


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