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Technology is rapidly transforming the way how banks operate and how they serve their customers, and becoming a key enabler of competitive edge. According to a new report by Deloittes Middle East Financial Services practice, eight emerging technologies are set to disrupt the banking industry in the coming years. An outline of the technologies and some of the key benefits they have to offer to the banking industry.

Cloud is an essential tool of todays service delivery model, and enables banks to penetrate new business opportunities and access new delivery channels. By leveraging cloud-based services, banks are able to decrease data storage costs through saving on capital expenditure (CAPEX) and operating expenditure (OPEX), while ensuring customer data is protected.

There are three types of cloud services:

Some of the key benefits of cloud-based working for banks include:

Big data refers to large and complex datasets that create significant challenges for traditional data management and analysis tools in practical timeframes. Using advanced analytics, banks can apply technology to efficiently extract valuable insights from data, and use those to improve the (strategic) decision-making process.

Benefits of Big Data analytics for the banking sector include:

Artificial Intelligence (AI) is now becoming a part of the business environment and is reinventing the entire ecosystem of the banking sector. By increasing the level of automation and using dynamic systems, AI supports decision-making, enhances the customer experience, and improves operational efficiency. AI also provides a strategic oversight for getting value out of data, which is now needed more than ever due to the data influx from a wide range of sources.

Benefits of artificial Intelligence in the banking sector include:

Deloitte foresees a growing appetite for AI investment across the Middle East. In fact, in one scenario, spending could reach over US$100 million in 2021.

Internet of Things is a technology which connects devices/sensors in a network with the aim of providing better data-driven insights. The banking sector started utilizing IoT relatively late compared to sectors such as energy and automotive. However, IoT has been gaining importance in financial services lately, especially in retail banks, which are showing large investments in IoT to be used in their internal infrastructure and consumer-facing capabilities.

The use of IoT devices will allow banks to collect massive stockpiles of customer data, ranging from their demographic details to their income and spending patterns, to their preferences. The access to this amount of data has the potential to drive fundamental change in the industry including increasing operational efficiency, preventing fraud, reducing nonperforming assets (NPAs), improving employee and customer efficiency, and facilitating easier verification, loan tracking, and customer retention.

The banking industry is mandating the use of intelligent automation to drive efficiency, eliminate repetition, and improve customer satisfaction by providing fast and efficient services. The technology behind this automation is called robotic process automation (RPA).

RPA is transforming how banks operate. Some key benefits of RPA in the banking industry:

Blockchain technology and its associated distributed ledgers were devised as a simple yet smart solution to keep track of the Bitcoin cryptocurrency in circulation. The solution leveraged a distributed ledger architecture under which all users who participated as nodes in the network had a copy of the entire ledger.

Benefits of Blockchain technology in the banking sector include:

A quantum computer is a new type of computer that harnesses the power of quantum mechanics to solve problems that were previously believed to be intractable on regular computers. In the banking sector, the authors predict four major use cases.

There still is some way to go however before quantum computing becomes a reality. According to Deloitte, the 2020s will likely be a time of progress in quantum computing, but the 2030s are the most likely decade for a larger market to develop.

Open Banking refers to the movement that banks work together in an ecosystem of (technology) partners. Banks broadly have four broad strategic options: full-service provider; utility; supplier; and marketplace interface.

These four options are not mutually exclusive. Two of these utility and supplier involve losing control of the customer interface as products and distribution become unbundled. However, organizations pursuing more than one option are likely to need to sharpen their own proposition for each option they pursue to remain competitive.

Open banking is poised to introduce a number of opportunities both for incumbents and new entrants:

In related news, according to another recent report by Deloittes Middle East Financial Services practice, the firm found that one fifth ofMiddle East bank holders now use FinTech solutions to bolster their experience and financial management.

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Eight technology trends that will disrupt the banking industry - Consultancy-me.com