The Future of Innovation in the Banking Industry

07-December-2022

By Andrew Mario Stefan Corera, Chief Applications Officer at BisB

As the saying goes, necessity is the mother of invention.

Over the last few years, we have witnessed the banking industry going through a drastic shift, one which might have once not been deemed possible if not for the rise and reign of tech. The increasing demands for paperless processes, simplified solutions, and digitization, have all been motivators in pushing the sector to innovate. Throughout this technology has manifested itself not only as a necessity, but a critical resource, that needs to be managed effectively.

A recent report by Market Data Forecast estimated that the FinTech industry would reach a market value of approximately $324 billion by 2026; and while the numbers speak for themselves, they also reinforce that FinTech innovation has become the fuel of the industry, and the architect of new age banking.

Traditional banks are feeling the brunt, faced with constant reminders that digital transformation is toppling traditional practices and standing at the very crux of business propagation and sustainable growth. From biometric fingerprints to facial recognition, automation and Artificial Intelligence are now considered mainstream practices in the banking industry, as opposed to being revolutionary inventions as seen not too long ago. Google has predicted that the finance industry is set to emerge as the lead AI investor in the MENA region, citing 35% of capital lenders amassed from this sector.

With FinTech on the rise, powering the industry’s ambition to drive a contactless community, and more intuitive interactions, the future is rife with potential. Through an array of use cases and offerings, one might find the options bewildering and somewhat overwhelming, yet we are all the richer from the experiences and conveniences it affords.

All eyes are set on creating the ultimate personalized banking journey, governed by nanosecond speeds and seamless navigation, and frictionless engagements. Simplicity, speed and hassle-free experiences are the main selling points for FinTech. Companies are on the move to develop the next line-up of tech-savvy solutions for their customers; while customers are vying for the next mind-blowing digital service. Although the integration of technology across wider eco-systems still needs some finetuning, the future of serviceable banking through cutting-edge digital applications, will eliminate mundane processes, while bringing much sought experience to the end consumers fingertips.

But for this vision to be made possible, it cannot be a solo endeavor. The industry needs to embrace FinTech players through meaningful, strategic collaborations to unearth the next best digitally-driven solution. At BisB, we have already made headway in this regard, partnering with the Central Bank of Bahrain’s Digital Lab ‘FinHub 973’ to facilitate a more synergetic environment between the FinTech community and the banking sector.

However, progress cannot be made on industry collaborations alone. The successful integration and roll-out of new financial technology needs an ecosystem that is mature, in-tune and accepting, which goes beyond the financial realm. This is where stakeholder partnerships come into play to facilitate financial literacy and encourage tech adoption across multiple community verticals.

Shortly after BisB’s launched its innovative NFC payment solution – “Future Leaders” – appealing to a much younger demographic as a means, to nurture financial responsibility in the community amongst the next generation, the Bank expanded its collaborative efforts with an additional step. BisB joined hands with Al Naseem International School to offer the payment solution directly to students enrolled at the school.

But technology is not without its limitations. Despite its infinite possibilities, the industry needs to be weary of its challenges just as much as its opportunities, be it the high cost of implementation, or the increased investment in upskilling resources, and the persistent threat of cybersecurity. A report by ThoughtLab revealed that in 2021, the average number of data breaches increased by 15.1% compared to the previous year, indicating that FinTech apps have become the easy target for hackers.

They say that the best way to predict the future is to create it; but in taking the giant leap into a future powered by Artificial Intelligence, Machine Learning, Automation, and Data Analytics, the industry needs to be mindful of the entire picture to successfully deliver a personalized banking experience that is both safe for, secure and tailored to its users.