Banking Technology Trends

This article was published by Ignacio Nordmann on 15/11/2022 at LinkedIn

Current context of payment platforms

FEBRABAN, the Brazilian Federation of Banks, published the 30th edition of its annual review about banking technology, for the first time with three volumes: the first one analyzing technology trends for the banking sector, the second one: technology investments and the third one: transactions. Twenty-four banks participated, representing 90% of Brazil's banking assets, and these are the main conclusions of the first volume:

Technology at the service of the customer: digital consumers push the fast pace of innovations, with digital payments exploding thanks to instant payments (PIX in Brazil), more efficient and less expensive.

• 91% affirmed that they will promote digital channels as their main for customer relationship and as a way to deliver a better customer experience (CX).

• 87% said that the high expectations of customers about their digital channels drove the digitization of the bank.

• Priorities in 2022 (multiple option, up to 4 options): Providing a better experience to customers in digital channels and increasing efficiency through digitization has become a standard:
  - 78% Analysis and exploitation of data obtained in Open Finance.
  - 78% Cultural transformation of the bank.
  - 39% Superstores or financial super-apps.
  - 35% Financial consulting based on data.
  - 30% Reformulation of agencies.
  - 26% Transactions via WhatsApp.
  - 22% Construction of consumer trust (shared data).
  - 17% Expansion of transactions via chatbot.

Main vectors:

• The first vector is the overall experience of the customer who has zero wait time expectation.

• The second is security, risk mitigation and giving customers more confidence and peace of mind. When the operation is very manual, it is more exposed to risks, fraud, mistakes, errors, and rework.

• The third is innovation, the possibility of using innovative ways of relating to or consuming financial products. With technologies and Open Finance (Open Banking) the sky is the limit because industries are beginning to mix, with conjugated and integrated offers. This third step is where a new way of doing banking opens up.

Technology Agenda 2022

• Artificial Intelligence: Financial services is one of the industries with the highest volume of customers and data, and the banking sector is under pressure to offer hyper-personalization of products, services, and prices, for all segments with immediate, seamless, and personalized experiences. AI has the ability to improve efficiency, increase differentiation and influence the customer experience, being one of the main bets for banks in 2022.

• Automation: Operational efficiency will always be on the agenda, which is why automation is relevant. The simplification and redefinition of traditional processes via automation or robotization (RPA) can produce increases in efficiency, control, and security, as they reduce the volume of documents and errors in operational activities.

• Cloud: Cloud adoption and deployment allow you to transcend constraints, achieving greater agility that can be used to reimagine and transform the way businesses operate. Cloud means flexibility to grow and innovate.

• Cybersecurity and data privacy: The rapid adoption of the cloud, the explosive growth of APIs, the number and variety of connections with third parties, and the multiplication of players in the ecosystem (Open Finance) increase operational complexity. This complexity is here to stay; there is no other option than to gain more visibility. 100% of banks are aware that cyber security guaranteeing data privacy is a top priority.

• Open Finance: the competitiveness of the sector requires that institutions make increasingly faster and more efficient decisions. Given the high volumes of data in the industry, the adoption of strategies and practices enabling the capture and use of this data more effective becomes more relevant. Open Finance is a reality that makes it possible to increase the interoperability of the financial ecosystem, as it creates a secure environment for data sharing and enables new business opportunities and greater value generation for some, and threats for others; the difference will be in the attitude and actions in relation with this phenomenon that also came to stay.

• IT transformation: Banks realized that for digital transformation to occur effectively, changes are necessary from the inside out, in relation to knowledge, values, culture, way of operating and serving. For this, there must be a team with technical and business knowledge, inserted in a culture focused on agility, customer centricity and productivity.

Brazil joins the United Kingdom and Australia as the most innovative countries in the world in the financial services and payments industry, having early implemented, under the patronage and control of the Central Bank of Brazil, instant payment transactions (PIX in Brazil), widely adopted by consumers, and the progressive and irreversible fulfillment of the Open Finance or Open Banking agenda, which opens the gates to the entry of new players from other industries and enables consumers to allow their providers of financial services to share their registry and transactional data, for their own benefit, paid in the form of more and better offers of digital products and services.

These leading countries are showing us a path of profound transformations in the financial services industry, which will soon reach the South American neighbors of the yellow-green giant.

Ignacio Nordmann
Security, Antifraud & Investigation Analyst
Member of ACFE (Association of Certified Fraud Examiners)