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21st Century Banking: Prepare to Bank Differently In The Future

General Business News

March 2014

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21st Century Banking: Prepare to Bank Differently In The Future

Every day it seems that there is a new story about technology revolutionizing the way business is done. Banking is no different, and the ways businesses conduct their banking has been forever changed by mobile phones, the Internet and automation technologies. Between 2006 and 2010, transactions at bank branches dropped 25 percent to 8,550 per day, according to Novantas. This is part of a larger trend that reveals a drop of branch-based transactions falling 45.3 percent since 1992, based on a report from The Financial Brand. With the trend showing no reversal, what Internet, mobile-based and automation trends will be part of 21st century banking?
Automation

According to GoBankingRates.com, technology is already replacing people with highly interactive computer systems. Instead of human tellers, touch screens are the new customer service representatives. Customer service experts are still available, but this time only via teleconferencing at the customer’s request. Companies that cater to future generations’ needs by deploying technology that deliver speed and instant results will be able to retain and grow their customer base.

Mobile-Based Technology

According to BankTech.com, using mobile phones to pay for goods and services through apps and mobile wallets is the future of banking. Instead of using cash, checks and debit/credit cards, these two technologies will be used interchangeably in the not too distant future. With only 10 percent of bank customers using mobile banking, the market is expected to grow from $12.8 billion in 2012 to $90 billion in 2017. While the technology is still evolving, virtual currency is expected to serve as the medium of exchange.

Accepting payment via digital wallets is a future trend expected by BankTech.com. With more than $4 trillion in payment potential for businesses to claim, consumers are expected to continue to adopt digital wallets to avoid lengthy lines at the store and elsewhere. Businesses can take advantage of this technology by emphasizing security controls and anti-fraud measures while accommodating customers’ increased demands for convenience to pay anywhere. Banks can market better to retailers and other payment processors to help them cater to increased consumer demands.

Internet Trends

Social media will become more important for customers and banks alike. According to BAI, customers are more likely to use financial products when they are integrated into social media, such as Facebook or Twitter. By 2016, one in three customers will purchase at least one banking product if it is connected to social media.

Banks that develop and adopt software and technology that can handle and systematically analyze big data about their customers – such as demographics and spending habits from internal and third-party sources – will deliver greater levels of customer service, become more efficient with day-to-day functioning and get a better handle on current and future risks.

Traditional credit bureaus will still be used to determine payment history and risk, but looking at social media will determine one’s social media reach and potential for new customer referrals. Social media can also help determine if an applicant’s information is up-to-date and accurate regarding their place of employment by cross-referencing their application data with their LinkedIn, Twitter or Facebook profile.

These are just some of the future trends that will occur as banking and related technology evolves.

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These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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