The banking and financial services sector has been at the forefront of adopting technology to enable better and secure customer experiences. The current pandemic has catalyzed the transition to digital systems, but it is important to understand that banks and financial service providers were already focusing on their digital infrastructure. The pandemic has only shifted the timeline for this change.

There are 4 major changes we can expect in the banking sector. These changes will affect not just the way banks deliver services but also how banks manage compliance and risks.

Contact-less banking and payments

There are many contact-less payments solutions available on the market already. Apple Pay is the most widely known but there are similar payment solutions available from other vendors as well. These solutions generally use the NFC (near field communication) chip present in modern smartphones to instantly authenticate payments without requiring any physical touches between devices.

We can expect people to be apprehensive about the way we are required to touch everything for a few years after the pandemic has been contained, which will result in people preferring contact-less payments and transactions. This means that banks and financial service providers must prepare to enable contact-less payments for their customers.

Businesses will need a secure and easy way to enable these payments and it is important that banks provide the support and infrastructure that these businesses will need. Apple Pay and other such services already have a foothold in many markets; banks must ensure that they have competitive solution which is as easy to use for customers and to implement for businesses as existing payment solutions from non-banking payment service providers such as Apple Pay, Google Pay, Alipay, Amazon Pay, Stripe, and Payoneer.

Increased transactions

The banking industry should expect an increase in the amount in the amount of transactions they handle over the coming few years. There are multiple factors that will contribute to increased transactions. While many businesses use credit cards, digital payments, and other payment solutions, there are still many transactions which are handled by cash. Most people use cash for smaller payments when buying a few items from small stores.

The pandemic will result in an increase in customer desire for cashless payments. Cash can be a potential vector for diseases. The notes and coins being used interchange hands frequently. The shift of more transactions from cash to other payment services will mean that the number of transactions being handled by banks will increase.

The role of compliance management in enabling digital transactions

Banks do not have to focus only on enabling contact-less payments and on preparing to handle more transactions from a workload point of view – they also need to ensure that they can do both while ensuring compliance management throughout the process. The problem is that many banks and financial service providers are either handling compliance manually or using legacy compliance management systems that were not designed for the current era. These systems are not fast enough to enable instant digital transactions.

Banks will thus need to implement compliance technology that works instantly. They will need to automate compliance processes to enable customers to securely make payments while keeping the banking infrastructure secure from fraud. Automation in compliance management can help businesses exponentially increase the efficiency and productivity of their compliance teams. These systems automatically monitor every transaction and document in the banking system and highlight compliance issues instantly. They can also perform in-depth analysis on the banking system to uncover potential vulnerabilities.

Banks and financial institutions will need to come up with an alternative that ensures security without requiring any physical meetings. The good news is that such alternatives already exist. The blockchain is the most probably contender. Share on X

Digital verification tools

Payments and transactions are only part of the change that can be expected. The focus will be on contact-less banking, which means enabling secure banking services for customers without requiring them to visit the bank branch or meet with a bank employee. Requiring people to visit a physical bank branch is often used as a security measure. It authenticates the documents and information being provided because they are being provided by the user themselves.

Banks and financial institutions will need to come up with an alternative that ensures security without requiring any physical meetings. The good news is that such alternatives already exist. The blockchain is the most probably contender for how banks will use digital verification in the future. The world’s largest banks have already committed to collaborating on a digital payment system that uses blockchain technology.

Blockchains were designed to enable cryptocurrency but they may end up being more influential than cryptocurrencies. The concept of a blockchain is simple – the ledgers (the data) is stored across the network by users of the payment network. This means that the records of transactions are present across hundreds of thousands of systems across the world. Every transaction has a unique key, so data privacy is ensured, but the encrypted data is distributed to everyone.

Blockchains were designed to enable cryptocurrency but they may end up being more influential than cryptocurrencies. The concept of a blockchain is simple – the ledgers (the data) is stored across the network by users of the payment network. This means that the records of transactions are present across hundreds of thousands of systems across the world. Every transaction has a unique key, so data privacy is ensured, but the encrypted data is distributed to everyone.

This ensures that the data in the system cannot be tampered with by any third party. If a business or customer gets hacked and someone attempts to change the digital records their attempts will fail. The system will simply crosscheck the ledger with the hundreds of thousands of other ledgers and detect the changes. Blockchain technology can help banks ensure that they can provide digital tokens to verify the identity of customers without worrying about these tokens being misused or hacked. This will also allow for automated compliance management through instant verification of data and documents.

The future of compliance management lies in faster data processing and improved data insights. Want to see what an AI powered compliance management solution can do for your organization? Get in touch with our compliance experts for a detailed demo of how our solution can help your business.