Future of Banking! 9 Trends

Today fintech & banking industry is more disruptive then any other, let's see what are the most alluring & a bit beguiling trends that the industry is going to follow/following:

Blockchain

Technically could be compared to singly linked list with rear node pointers. Blockchain could be referred to as a database tech or concept inheriting from distributed computing or distributed database, it was first devised for Bitcoin. Blockchain could be used to support infinitely growing list of records, each record called as block. Somewhat like a node in a linked list, each block contains timestamp data & address to previous block. Blockchain could have applications into areas like global supply chains, financial transactions, asset ledgers, decentralized social networking & healthcare & medical records. It would be a highly hectic process (not possible in quite some cases) to change the data of a recorded block. A geeky application of blockchain into human life could be recording of each & every small or big event from the provenance of a being to end of its life. ICICI has already conducted a successful pilot around Blockchain tech implementation. Zebpay has become India's one of successful crypto currency exchanges. Goldman Sachs has got patented some of the great technologies around blockchain.

Sharing economy

Today more & more consumers desire to be in control of consumption of the goods (products & services) they own rather than having the passive ownership of their goods. Sharing economy basically means peer to peer or B2B based sharing of goods mostly with the help of digital or online medium. True implementation of sharing economy would require all the technology & infrastructure around. Technology would help in a great way to create & execute smart contracts around goods sharing; Distributed Ledger & IoT would compliment the phenomenon. AirBnB is one of the true pioneer in sharing economy business.

Alternate currency

We can define it as possibly, partial replacement of a nationalized or an internationalized currency. There are higher tendencies of use of an alternate currency in a specific zone or area because of adoption by people due to their liking or fulfillment of tasks (commerce related, buying or selling etc.) in a way favorable to them. Most of the alternate currencies could be earned either in exchange of specific goods or a nationalized or internationalized currency. Recently, Bitcoin, Ethereum & Ripple have become the most popular alternate currencies worldwide & Yes... Sodexo could be said as a kind of alternate currency widely used around in India specifically for grocery & food related expenditure, though the value of Sodexo coupons is in INR.

Virtual bank

Virtual or Direct banking could be consumed via online, telephony & ATM mediums; more importantly banks are not required to have hard infrastructure & bank branches, saving them huge costs required to set up such a network & customers not required to bear the pain of visiting such branches for even small tasks to be done. In India, Indusind's initiatives like Video Branch & DBS's move towards a complete e-banking mode have gathered great reviews & positive feedback. Ally & Discover bank are among the top virtual banks of the world.

Payments bank

This phenomenon being specific to India, RBI (Reserve Bank of India) has created few guidelines around payments bank & its procedures, processes. Payments banks will have a restricted deposits per customer, currently the total being 1 lakh INR per customer or payment bank account. Such banks will be able to support most of the bank processes related to customers day to day banking & payments needs apart from lending needs like loans & credit cards. As of now, Airtel PB, PayTM PB & India Post PB are the three active payments bank & apart from that RBI has licensed 10-12 more entities to set up & exercise payments bank. These entities like Airtel, PayTM & India Post can use there existing infrastructure like showrooms, shops, branches & agent network to successfully exploit such a business opportunity.

Microcredit

Providing of small loans or credit to the people with rare transaction & credit history is termed as Microcredit. Students into graduate & higher studies, people with unsteady employment & unavailability of any collateral assets & value are the target audience for the businesses built around Microcredit phenomena. Lot of organizations are building around algorithms to somehow calculate a credit score related to such customers based on his/her day to day expenditures from multiple data points & sources. Microcredits could help customers to buy mid range electronic goods like expensive mobile phones, starting up with very small businesses, small education needs etc. Artoo, IFMR capital & Finca are some of the glowing names around microcredit services.

Artificial intelligence

Artificial intelligence is applied when we tend to make the machines around us to perform human functions like problem solving, listening, talking in particular natural language, learning & unlearning (in advance scenarios), complex information analysis, game playing etc. How does we make machines perform such complex tasks? Simple answer to it is by exploiting the huge data sets available for human activities, behavior, satellite & navigation data, usage patterns. Recent advances in AI are responsible for the achievements on IoT (Internet of Things) front. What takes the AI to the next intelligent level is advances in the field of Machine Learning recently which actually allow the machines to learn the new behavior, patterns around reaching a goal or completing a task & more importantly unlearning a pattern or behavior in case of availability or leaning of a new way to do the stuff. Applications of AI into fintech & banking could be vast, starting from Chatbots, book keeping, financial trading, user spend analysis to fraud prevention etc. Banks like HDFC & BB&T (Branch Banking and Trust) are making good use of AI & related tech.

Contactless payment

Contactless or digital payments could be achieved with the technologies like RFID (Radio Frequency Identification), NFC (Near Field Communication) or MST (Magnetic Secure Transmission) which could be exploited by smart debit & credit cards, transit cards, mobile devices & payment applications. Some of the above could even be consumed in the absence of online connectivity. Some of the products based on contactless payments are Android Pay, Apple Pay, Samsung Pay, RioCard, Visa payWave & MasterCard PayPass etc.

Ethical banking & investment

Ethical banking is providing banking services & helping around the entities with motives like social & corporate responsibility, social entrepreneurship, ethical investment & environment impact organizations & individuals etc. Ethical banks are governed by the same regulating authorities as other banks but the main differentiating factor being the transparency in organizations, projects & individuals they help or finance being around social & environment impact. Biggest customers for such banks would be the Non-profit organizations, NGOs, Environmental activists etc. Above shared info-graphic provides a good idea about an Ethical bank responsibilities. Organizations like Mahindra & Mahindra Financial Services & Charity Bank are doing some good work around providing such services.