Banking on a Digital Future

Rita Makhoul, May 01 2017

In this weekly column, we will be exploring how technology has been impacting the banking sector and will be talking to several banks across the region to find out about their upcoming plans. 

As technology propagates across the world, banks have been placed at a crossroad today, using an outdated and overloaded architecture to push products and services on increasingly demanding and tech-savvy customers. Digitization promises to automate and improve many banking processes. Yet it’s not without peril: customer demands and expectations are increasing, and technology is fuelling the emergence of significant new competitors.  

We explore some of the technologies that we believe will be transformative for the banking sector:


A Beacon of Enhancement

When it comes to the banking sector, one of the greatest challenges faced by most mobile banking partners and financial institutions has been in enhancing the opportunities around adoption, engagement and monetization of their mobile channel. And now beacons offer the perfect solution to this.

Beacons could boost both customer engagement and revenues. Beacon technology allows banks to be proactive with their consumers.

The moment a consumer walks into a branch, their phone would ‘ping’ with a welcome message. A summary of services would be displayed; or perhaps a special offer reflecting the customer’s personal bank history and net worth. The bank will be able to recognize him/her, bring up relevant information with the teller or bank manager and equip them to offer proactive services. The bank can use customer analytics later, as they can collect data on traffic patterns to help them manage their business. Permission-based interactions is the key.

There are challenges of course, and privacy is one of the ongoing concerns for consumers, especially when it comes to disclosing their location. However, providing consumers with a clear added value in return, consumers could opt-in for tailored marketing and location-based services. For instance, DenizBank in Istanbul has used beacon devices to provide its bank customers the comfort of a queue number without actually queuing at the branch as long as they are within a 50-meter distance of the beacon devices. Another great example is that of Mobiquity Networks who partnered with Relevant Solutions to allow banks to reach out to their app users in shopping malls via beacons. Any consumer who has their app can receive offers from brands and merchants at malls by being paying with that particular bank’s card.


Augmented Reality Augmenting

So far, banks have merely been exploring ways to combine AR technology with traditional banking tools. Several banks have created AR apps to help consumers find the nearest branch or ATM.  While navigating through the city, users can see real-time information on the nearby location; receive supplemental details, and even book an appointment.

Some of the interesting examples of how banks have been experimenting with AR include Halifax Bank and Australia’s Commonwealth Bank who leverage real estate date in their apps enabling potential buyers to find available properties for sale nearby, view detailed profiles of the property, and have included mortgage calculators and qualifying applications. The app also includes a virtual 3D overlay of the interior.

Another example is ‘BreezeLiving,’ an AR app launched by Standard Chartered China, which provides location-based services like discount coupons. Discounts are disguised as kites that can be caught, converted, and shared with friends. BreezeLiving is also a social deal finder since users can set up a ‘tribe’ where they and their friends can share deals. Axis Bank in India has also come up with its AR feature within its mobile app that lists all the nearby possible places their customers can get attractive deals.


An Immersive Experience

Banks are taking an interest in virtual reality a way mainly to revolutionize customer relations through enhancing communications. Controlled avatars would be able to present advice and offers to consumers. Rather than taking time off their busy schedules, consumers can meet with their avatar in a virtual branch and be presented with advice, offers, and shown simulations through real-time graphics. The technology not only saves consumers’ time, but also lowers the banks operations costs.

VR may also be used for internal needs such as training efforts or recruiting. For instance, interviews may be done with ‘interview stimulators’ and internal training may be also done via virtual reality. One recruiter or trainer can control several avatars interviewing or providing training with a realistic effect.

Citigroup, Fidelity Investments, and Swissquote have all introduced VR to help investors manage their finances. Financial traders’ workstations provide an abundance of data in formats difficult to process on multiple monitors. To increase efficiency while reducing time and cost Citigroup introduced a holographic workstation with the use of Microsoft’s HoloLens. The trader wears the HoloLens and views ambient, high-level market conditions represented in a combination of 2D and 3D spheres hovering at the top of the workstation. They then use hand gestures and voice to filter financial information and view historical and real-time performance.

Fidelity Investments have come up with StockCity for Oculus Rift, a tool that applies virtual reality and data visualization to help investors manage their finances. It turns a portfolio into a virtual city where each stock is a building with the height and footprint representing the price, trading volume and outstanding shares.

Swissquote developed a VR trading application enabling users to make trades with a glance. The VR headset creates a 360-degree trading wall for users to monitor the markets, feeding real-time Swiss Market Index data, currency pairs and the main indices to users. Eye-tracking technology enables users to bring up more information about a specific stock and execute trades to a preconfigured value by focusing their eyes on the symbol.


The Droids Have Arrived

Many believe that artificial intelligence (AI) may be the future of banking. The digital consumer is being trained by firms that are becoming masters of AI (Amazon, Google, Facebook and Apple) and expect the companies they use to know them, understand them and reward them through personalized communication.

The implications for banks is that by tracking users’ habits, activities, and behavioral characteristics, financial data and products can be personalized to meet and anticipate each user’s unique and changing needs. This makes it practical for each user to have his/her own digital personal financial assistant.

Due to the increasing automation of customization, banks can offer more personalized services in near real-time at lower costs. AI also applies to automated financial advisors and planners that assist users in making financial decisions, often called “robo advisors;” or as smart wallets that monitor and learn users’ habits and needs and alert and coach users, when appropriate, to show restraint and to alter their personal finance spending and saving behaviors.


No longer just the objects of fascination in science fiction, robots are beginning their invasion of banking. Robots along with artificial intelligence in banking have the potential to reduce costs, expand skills, and improve the customer experience working alongside (or replacing) humans.

As a ‘living’ example of how robots can be utilized in financial services, Bank Audi and Emirates NBD, along with several banks across the globe, took a first step toward employing non-human staff with the introduction of a customer service humanoid robot. While the robot is not intended to replace branch workers, they are being used to meet and greet customers, answering simple questions in various languages, freeing up some of the branch staffs’ time to work on more value added services.

City Union Bank in India introduced their first banking robot, Lakshmi, that can answer questions on more than 125 subjects and if stumped by a question it contacts the branch manager. As with all robots currently available at banks, all data is collected and the robot is constantly equipped with better data sets to improve their interactions. Lakshmi is capable of informing customers of their account balance, interest rates on home loans, account details, and transaction history.


Beam Me Cash

Trying to transfer cash to a friend's bank account is a surprisingly stressful process if you're going through a bank. The transfers tend to take for days and come with fees. However, a major shift is underway.

Banks expect the use of blockchain technology, which would allow institutions themselves to update data in real-time, to lower costs by cutting out the middleman, and speed up transactions since banks would cut down on time spent reconciling disparate data. As per a report by Accenture, blockchain technology could help the world’s largest banks to cut their infrastructure costs by between $8 to $12 billion a year by 2025.

For a long while, there has been abundant talk about the possibility of major banks adopting blockchain technology into their infrastructure and practices, but little action. This past year seems to have finally brought some indication, however, that at least some of the global leaders in finance will move toward the technology that has long been affiliated with the digital currency Bitcoin.

According to an IBM report entitled ‘Leading the Pack in Blockchain Banking,’ banking and financial markets are adopting blockchain technology dramatically faster than initially expected. In four years, IBM says that 66% percent of banks expect to have blockchain in commercial production and at scale.

Across the region, we have witnessed several banks announced that they have adopted Blockchain. The National Bank of Abu Dhabi (NBAD) announced that they have started to offer real-time cross border payments on blockchain technology, and Emirates NBD have announced that they have partnered with ICICI, an Indian bank, on a project to use blockchain technology for global remittances and trade finances.

In this weekly column, we will be exploring how technology has been impacting the banking sector and will be talking to several banks across the region to find out about their upcoming plans. Stay tuned!


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