Have you noticed that your bank app is doing things it never used to do, like offering personalized financial reports, budgeting advice, or even suggesting ways to invest your money? Well, that’s Banking 2.0 or in other words, digitalization of the financial industry.
We live in a digital tech-driven world surrounded by AI, so this change isn’t really surprising. After all, the old financial methods felt outdated, especially with the growth of the internet, which means that we need something more accessible, easy to use, and personalized.
The world went from an era where cash was king, to contactless and digital payments only.
But if the banking sector advanced so much in just a couple of years, what can we expect from the future?
Let’s explore whether our everyday financial services will evolve even more in the future.
The Growth of Open Banking
Have you ever heard about Open Banking? This is a trend that was recently introduced and involves a new level of transparency. In other words, banks always wanted to keep all the data to themselves, not sharing anything with individuals.
Why? Well, why introduce individuals to all the secrets of the financial sector when they can make more money from people that don’t know what’s going on.
Well, these times are changing, and now banks are sharing (part) of their data (with your permission of course). This opens so many opportunities. First you can get useful data to help you make wiser financial decisions, and secondly, this share of data allows you to connect your bank account to third-party service providers that offer record and expense tracking, budgeting tools, investment services and more.
For example, if you have 2 or more bank accounts “Open Banking” will allow you to connect them with a third-party app and browse everything from there.
Basically, Open Banking is about sharing your data with other third-party services, which opens new doors for consumers in finance.
AI-Powered Personalization
We cannot talk about technological trends and not mention AI. After all, it is the top trending topic for years now, and we still haven’t explored its full potential. Artificial Intelligence (AI) has also made its way into the financial sector.
Some tech-forward banks already started investing a lot of money in AI technology and since we are talking about an institution that handles a lot of data, it would be fairly “easy” to teach the AI algorithm to perform complex tasks.
We all know that banks are institutions that store data (the most valuable resource), and now they can use this data to analyze and even predict what you might need next. Yes, it might sound creepy, but machine learning and AI are quite powerful tools that can predict all kinds of things to a scary level of accuracy.
Banks can now introduce AI in many different ways, from 24/7 AI chatbots to personalized AI coaches, budgeting advice, and many other services.
This shift is what allows your bank to say, “Hey, you’ve been spending a lot on coffee – maybe we can help you start a savings plan instead?”
Example: Ally Bank uses AI to automate savings by analyzing when there’s a “safe-to-save” amount in your checking account. If you’re always living paycheck-to-paycheck, the app might pause contributions. And for those of us who tend to ‘accidentally’ overspend, that kind of algorithm is a lifesaver.
Digital Wallets and Cryptocurrencies: The Future of Money?
The days of digging around in your bag for loose change are on their way out. Digital wallets like Apple Pay, Google Pay, and even cryptocurrency wallets are changing how we think about and handle money. And it’s not just tech-savvy Millennials using them; nearly 51% of Baby Boomers have used a digital wallet at least once.
Expect banks to integrate more cryptocurrency options. Even major banks like JPMorgan Chase have started offering crypto services to high-net-worth clients. Will we all be using Bitcoin to buy groceries soon? Not necessarily, but cryptocurrency’s presence in the financial sector will continue to grow.
Digital wallets bring massive convenience. For example, Genome financial services offers multi-currency online bank accounts which is perfect for today’s gig economy. Rather than carrying cash or cards, your phone becomes a one-stop shop for payments, identification, and even loyalty rewards.
Banking-as-a-Service (BaaS)
Imagine a world where companies can “plug-in” financial services into their own products without becoming a bank. Enter Banking-as-a-Service (BaaS). In simple terms, BaaS allows non-bank businesses (think apps, fintech companies, or even major retailers) to offer banking services without having to go through the hassle of becoming a licensed bank.
Companies like Shopify and Uber are already experimenting with BaaS, providing merchant accounts and wallets to users and drivers.
Questions You Might Be Asking (and Some Answers)
Will AI eventually replace human bankers?
Not exactly. While AI can handle data crunching and basic queries, complex decisions (like approving a mortgage or managing a portfolio) still need a human touch. AI works best as an assistant, not as a replacement.
Is my data safe with all this Open Banking?
Yes, as long as you’re using reputable institutions that follow strict security protocols. Open Banking regulations require banks to use secure APIs (Application Programming Interfaces), which keep your data encrypted and only accessible to those you authorize.
Does this mean I’ll get fewer spammy calls from my bank?
Ideally, yes! With banks focusing on personalized recommendations, you’re less likely to get generic marketing calls and more likely to get advice that’s actually relevant.
