2021 is anticipated to bring in more technological blows to the banking sector

Ever since the 18th century, the banking sector is evolving drastically. The industry is one of the oldest businesses in the world and has progressed and grown with every passing year. Banks have always been early adopters of technology, and the pandemic has further accelerated the digital initiative. However, 2021 is anticipated to bring in more technological blows to the banking sector.

Predictions about the demise of banks due to the increasing adoption of technology and substitute solutions have been greatly exaggerated. But we can’t deny the fact that technology is taking over banking, but for good and won’t push it off the cliff. Technology has helped banks generate additional revenue, reduce expenses, and manage risk exposure in a more proficient manner. At the time when the banking industry was procrastinating the full-fledged deployment of technology in the routine working system, the pandemic hit them hard. If there were any doubts about the need for scaling digital transformation urgently in banking, the lockdown dispelled them all. Even though 2021 is more or less focused on getting back to normal, it has invited more technology to follow suit. IndustryWired has listed the top five banking trends that will rule the sector in 2021. 

Moving to public cloud

Prior to the pandemic, banks stored data in different ways, mostly, in the physical environment. They used data centers to keep banking information safe. However, the lockdown made us realize that a digital transformation is the need of the hour and even a digital way of storing data at data centers will do no good. Henceforth, banks adopted cloud platforms to encrypt financial information. Cloud came with a handful of advantages like scalability, agility, and cost-efficiency. In 2021, banks will discard on-premise data storage and streamline the cloud-first approach. But the progress won’t end there. Banks will further move from a private cloud to a virtual private cloud under public cloud infrastructure, and from there to a hyper-cloud and then, a poly-cloud environment. 

Evidencing a rise in digital regulators

The year 2020 laid the foundation for digital technology and its regulators. Digital financial services are clearly impacting banks and they are forcing banks to rethink and restructure their approaches to becoming resilient, adopting new technologies, leveraging data and constructing agile operating models due to security concerns. Henceforth, digital regulators will step in and overview the digital economy. They are expected to ensure a clean and trusted financial system by protecting end-customers and facilitating market competition.

Overhauling of business models

The reason we go after technologies is to minimise human labour and utilise the sophistication it provides. The banking industry also induced people to do the same. Emerging banking business models like mobile apps for transactions and financial handling is stealing the banking sector. Now, the entire banking system is moved online, allowing consumers to access several critical services from anywhere worldwide. The new business model has allowed customers to interact with the products and services from the banks through mobile apps or websites. 

Information security to take centre stage

When everything goes online and digital, it surmounts the trouble on security concerns. All the critical details including sensitive information, especially, financial data between banks and customers are now on the cloud. Unfortunately, this opens door to leaking pivotal information to cybercriminals even though the exchange usually takes place through a bank’s backend system or via a third-party player. Henceforth, in 2021, cybersecurity and access management will take centre stage to address the emerging security issues. It will ensure that the information is shared securely with verified customers. Besides, blockchain technology is also enabling a secure platform for data sharing. 

Banking-as-a-Service (BaaS) makes its entry

Banking-as-a-Service (BaaS) is another fintech innovation that is enabling banking and fintech collaboration. BaaS is an end-to-end approach that facilitates fintech companies and other third party organisations to connect with a bank’s system employing APIs. This avails organisations to build innovative financial services upon the provider bank’s regulated infrastructure while enabling open banking services.