With the BFSI sector looking to become more tech-savvy and future-ready, it is important to take note of the innovations that we may see in 2022. ET BFSI gives you a list of six innovative trends, likely to be rolled out in 2022.
The end of this ‘almost’ post-pandemic year marks a fundamental turning point for the banking sector. The industry, like every other, was caught off guard by COVID-19, which shook traditional methods.
In 2021, banks accelerated their digital banking transformation efforts by investing their capital and resources into data and advanced analytics, and innovation and reimagining a new workforce.
In response to the pandemic, banks and FinTechs have been busy re-assessing their operations and strategies so that they can reach out to customers in better and cost effective ways. These steps are resolving the regional banking barriers between urban and rural areas across the country.
Here is our list of top 6 likely trends that will be adopted by banking and FinTech companies in 2022.
#1 Hyperpersonalisation
Customers today expect their commercial banking experience to be the same as their experience in retail banking. Keeping this in mind, bankers have started admitting that the way forward for BFSI as a whole, is hyperpersonalisation.
“Hyper Personalisation is a journey that all financial institutions must make because the pandemic-induced digital transformation has led to customers being more inclined towards digital solutions that help customise choices,” said Ashwini Kumar Tiwari, managing director of State Bank of India, at the second edition of ET BFSI Converge, held in November.
It is highly likely that there will be a blending of commercial and retail customer experiences, and banks and Fintechs across the industry will either compete or collaborate to provide hyperpersonalised experiences for their customers.
#2 New core banking platforms
Banks are also investigating the use of new core banking platforms to support digital transformation efforts, including application modernisation, cloud, API-fication (application programming interface) of existing services. Banks will focus on building real-time, anywhere, and anytime banking.
#3 Open Banking: Data sharing
With the arrival of digital revolution, sharing of data has become easier and necessary. This requires that the data generated to be apportioned to all who might need it for various purposes. Data generated by financial institutions, including banks, are shared with FinTechs through means of application programming interface, which acts as the bridge between the two entities. APIs facilitate data sharing in the banking sector, which brings about the concept of open banking.
The Account Aggregator (AA) framework launched this year is a data-sharing system that will also provide easy access to financial data to different parties in the financial ecosystem. AA has come as a boon to individuals and small businesses alike as it is expected to address the credit gap in the country. It will allow lenders to conduct an easy and speedy assessment of the creditworthiness of the borrower.
#4 Banking-as-a-Services (BaaS)
In recent years, Banking-as-a-Service (BaaS) platforms and services have emerged as a cost-effective and efficient way for delivering financial services using open banking concepts.
Banks must adopt a service-oriented and composable/modular architectural approach in delivering new and innovative digital services. BaaS is a critical component for traditional banks and financial institutions on their digital transformation roadmap.
“It is very difficult to pinpoint a single factor as the next big thing in banking. However, BaaS has certainly brought in exciting possibilities in the banking ecosystem. While BaaS has brought in effective collaborations among banks and fintechs, we further expect to see advancements and perhaps, also radical developments in open banking, embedded banking, co-lending and API-driven banking infrastructures, going into 2022,” Cashfree Payments CEO Akash Sinha had told ET BFSI earlier.
#5 Major consolidations
There may be major consolidation in the neo retail banking world. There are far too many neo banks offering one or two services, which can result to be unsustainable, and they will look to merge or consolidate to accelerate growth trajectories. Big banks still have customers and will focus on upgrading their experiences by partnering with FinTechs as they attack inefficient areas of the ecosystem to deliver better services and customer experiences.
#6 Embedded Finance
Embedded Finance, also known as embedded banking, is seamless integration of financial services into a traditionally non-financial service. Banks provide financial services, and are best positioned to manage regulatory, compliance, and credit risk. They use their network and manpower to manage and service loan requests from the Embedded Finance ecosystem, which include FinTech companies that create end-to-end software tools (APIs and SDKs), and connect financial institutions with digital platforms.
“The acceleration of digitization, including automation and APIs will see banks scale BaaS faster, putting embedded finance within reach for more companies in 2022. Any application where there’s already a big user base will start to add in financial services as an offering,” said RV Ramanathan, Founder and CEO Hyperface
https://bfsi.economictimes.indiatimes.com/amp/news/industry/top-6-trends-likely-in-banking-and-fintech-space-in-2022/88541058
