Question

What technological innovations may change the existing structures of the banking industry? What technological innovations may cause disintermediation and disruption of the banking industry?

Answer 1

There are various technology innovations that are taking place which will disrupt and also remove the dependence on mediators from the banking industry

Robotic Banking: Lots of banks have started investing high on technology and one of them is robotic banking where robots are installed in the banks to do basic transactions like account statements, collection of cheques and cash, basic queries like latest interest rates, services like applying for debit and credit cards, processing of small ticket loans like personal loans, overdraft against salary account etc.

M-Banking: Banks have also brought banking with the help of technology in the hands of the consumer. Loan on phone is an excellent example where consumers can get loan on just a few clicks and there is no need for mediators or loan advisors to be in place. As the bank will save cost in paying out commission to the advisors the interest on loans will come down making it a cheaper option.

Selfie Account: A kerela based bank in India by the name Federal Bank - a private sector bank came up with a product called as Selfie-Account where a person can open a account just by clicking his own selfie and filling up the basic details. The account will be activated and the person can receive funds instantly for its use.

Block Chain: Some financial institutions have started testing the use of blockchain for their inter-bank transfers, which is helping them faster payments, fraud reduction, know your customer, and loan processing. Many see tremendous benefits of  streamlining and automating processes through smart contracts.

Smart Machines: Now a days banks have also started investing smart machines where the data and the preferences of the customer is stored and the customer is given offers and services based on that. For eg if the customer is using his debit card mostly for online shopping, he would be given offers related to that. Language preferences, Lifestyle preferences etc are all stored and the customers of the same preferences are targeted with offers of their choice. This is also a kind of Artificial Intelligence where the machine is learning itself the preferences of the customer.

Cloud computing: Another very important and amazing product is cloud computing where consumers can use their banking services in any part of the world with the help of storing the facilities on cloud. In this way he is accessible to his money all the time and can travel and work stressfree.

These are the few innovations which have started disrupting the banking industry and also removing the mediators in process for direct and clean banking experience with the consumers.