Future of Banking
Duration: 5 Days
Project Info: Product System and Service Thinking Class Studio
My Role: Research, Mapping, Design Fiction
About Project
As a part of our Product System and Service Thinking studio, we need to understand the complexity of the product at the system level. Innovation in the product doesn’t happen in isolation but it involves complex production, consumption, services and system. The coexistence and functioning of tangible products and intangible services are designed and combine to fulfil specific customer needs through innovation intervention. The innovation is influenced by various actors like users, stakeholder, environment, etc. and their interactions.
We picked the Banking Ecosystem and Artificial Intelligence (AI) to understand the complexity of both domains and how it has shaped each other over the years and how it will possibly change in the future. We started by mapping the evolution of Banking and AI. We mapped in terms of all players within the context and existing trends playing out there. We also mapped the possible utopian and dystopian aspects of the AI in Banking to understand the future trends in the system.
Banking Trends
We then project the present AI and Banking trends that can help us in forecasting the future of AI in Banking. We divided the system into five possible areas:
AI
Technology
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AI technologies make banking processes faster, money transfers safer and back-end operations more efficient.
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AI empowers banks by automating its knowledge workforce and make the whole process of automation intelligent enough to do away with cyber risks.
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AI will enable banks to leverage human and machine capabilities optimally to drive operational and cost efficiencies, and deliver personalised services.
Society
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Rapid technology innovation in banking sectors are changing consumer behaviour and are creating new experiences.
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The trend towards and demand for increasingly flexible and convenient services in our day to day lives force banking to innovate.
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Increased use of mobile apps have revolutionised the banking sector by facilitating easy communication between clients and institutions, offering value-added services, and introducing blockchain technologies.
Fintech
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Financial Technology (Fin-tech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services.
Internet of Things (IOT)
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IoT in banking and financial markets collect and analyze data on consumer behaviour and enable a deeper understanding of economic trends and customer preferences.
Digital Banking
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Digital banking is the digitisation of all the traditional banking activities and programs services that are available to customers when they are physically inside of a bank branch.
These five areas were further divided into Micro, Meso and Macro levels to understand the complete intersecting system around them.
Future of Retail Banking
After mapping the current AI in Banking at system level we ideate on how futures of such systems look like and how we can forecast the system-level change in this domain. We identify fintech as an area we want to innovate and how it will look in the future. The rise of the fintech companies have disrupted the traditional banking system and have brought the major shift in retail banking culture. Though retail banking has evolved and has taken the support of fintech companies to assist them, NeoBanks are the ones gaining more popularity and are projected to surpass the retail banking model. Neobank is the type of direct bank which reaches out to customers digitally only using mobile apps and personal computer platforms. It provides services like account, credits and payments without the burden of the physical network and is a partner with traditional banks. Presently, neobanks are under some regulation restriction but in future, we proposed that neobanks will take over the retail banks and will be known as REO bank. REO bank will operate on all the functionalities and services provided by the retail bank on the model of neo banking. It will entirely be online, customer-centric and hyper-personalised. REO banks will enhance customer experience, automate the services, provide deep insights, increase transparency and cybersecurity. Under this model, retail and small and medium enterprises (SMEs) will experience frictionless banking and hassle-free services.
SMES and REO Banks
In India, SMEs are considered as the lifesaver to different businesses, for example, farming, food industry, retail, and some more. In this aspect, neobanks appear to be at the actual space to be catering to the underserved SMEs regarding the banking and budgetary support systems.
REO banks will be an integral part of the progressive payments and financial solutions in digital India. With the attention on computerized instalments and advanced methods for digital ways of doing business, REO banking will be the quickest and will be reasonably developed within the financial framework particularly to take into account the necessities of SMEs just as consumers across segments.
REO banking solutions are for salaried employees and SMEs partners. They are considered to be a more hands-on way of old-fashioned banking. Instead of people going to the bank for transaction purposes, they operate the entire banking services on an online platform. These appeals to the younger, digitally savvy customers who can technically access the financial services anytime they want, unlike the traditional way which gave access only during the banking hours.
REO Banks which is being completely digitised and will help in the advancement of SMEs adding a service of a subscription model which will provide premium business essential services like expense management, ledger, automated bookkeeping, travel or insurance and so on. Also, they earn through partnerships and collaborations will be playing a major role. Open democratises on the range of services also will be catered for small and medium enterprises.
We have projected two possible scenarios in the future which will shape the banking sector:
Scenario 1
It shows how banks shortly will act as an active catalyst for the growth of SMEs sectors, in lines, we have also depicted how locals also will be an active partner which will give rise to the active participation of the society with REO banking.
Scenario 2
This scenario shows how Digital banking will be more prevalent in the near future which would give more rise to hyper-personalisation of banking services.
Team: Mrunali Ogriwala & Priyavadana J