Banking: Use Cases and Opportunities:
When was the last time you went to a branch of a physical bank for financial transactions? It has certainly become a rarity for many of us, perhaps unheard of for most millennials. Today, most banking transactions are just a click away. Welcome to the digital bank!
As sophisticated as it may seem, the banking sector is one of the oldest professions in the world.
Furthermore, the wind of technological change is currently blowing on the banking giant, not only as a digital bank in Europe but also in the corners of the world. This is an exciting time for emerging innovative banks and financial institutions, as big banks have no choice but to cool off in a new digital avatar.
The history of the banks
Europe was the heart of the banking system, even in its earliest raw form.
The word “bank” comes from the French word “Banque”, the Italian word “Banco” and the German word “banc”, meaning bank or agency. Lenders often set tables in large buildings or on a market square.
Italy was the center of international trade and banking transactions. The Italian cities of Florence and Venice had old banking services with checks and bills as we know them today. The first bank was established in 1157 with the support of the state in Venice.
As civilization progressed in the 20th century, banks developed and became more sophisticated.
Adoption of the digital channel in Europe
More recently, the origins of digital banking in Europe can be traced to the rise of ATMs in the 1950s and 1960s. Simple ATM and its IT infrastructure appear to be a game-changer in today’s banking ecosystem.
The introduction of the internet in the nineties took the banking sector into a different stratosphere. In 2000, the world was as close as any portable cell phone. Scandinavian countries and Europe have welcomed digital internet and banking services as they still have one of the highest internet penetrations to date.
The large user base in Europe has made it a natural breeding ground for FinTech companies, software engineering banks. Some entered the banking system, sometimes without a banking license, others worked with existing banks. These companies became known as neo-banks. They owned the platform and offered banking products to customers, such as savings accounts and credit cards. Difficult banks have also emerged, those with full banking licenses.
However, FinTech businesses cannot just consider internet penetration. A Deloitte study shows that the growing demand for a better digital experience, coupled with competitive pressure, has propelled them to digital banking.
Adaptation to the digital bank –
Initiatives of fintech companies and banks
The global financial crisis of 2007 destroyed people’s confidence in large financial institutions. New banks in Europe and demanding banks took advantage of this mistrust and offered ordinary people a new banking experience.
With a range of innovative products, increased transparency, user-friendly aspects, and a modern look, digital banks have managed to win the trust of people in Europe with their digital banking initiatives.
While former large banks after the crisis focused on recovering their assets, many smaller banks benefited from the largely ignored retail base.
When it was launched in 2013, the Berlin N26 took less than a year to reach one million users. Similarly, the FinTech startup Revolut has two million customers so far.
These insights are largely based on their innovation and ingenuity to engage customers and stay visible, even among the biggest names in the banking industry.
Use digital banking in Europe
The Fidor Group in Munich is one of the torchbearers when it comes to FinTech innovation. In 2017, he launched his digital community-based financial services market, “Fidor Finance Bay”, in partnership with US design firm “Eight Inc.” launched. launched. released. released. Therefore, in contrast to the competitive competition between banks, FinTech companies have become collectors, leading to a vibrant market.
Another example is ‘Holvi’, based in Helsinki, which started by offering customers a checking account and a debit card.
Collaboration with the German mobile store “SumUp” to offer loans to SMEs and customers
The four-year-long Monzo Bank has taken the banking sector to the next level. Without branches, customers can only communicate with this bank via mobile phone to help the business save costs. An intuitive personal finance app for a generation of millennia has managed to rapidly expand its customer base.
OPPORTUNITIES FOR THE DIGITAL BANK IN EUROPE
Artificial intelligence and machine learning
Artificial intelligence and machine learning could be the next big innovations in the banking sector. High-frequency rankings and data mining can be used to make accurate price predictions for different products and even prevent banks from closing.
Blockchain is also interested in the era of information leaks and hacks as it provides an additional layer of security. Of the 1.8 billion euros in global blockchain spending in 2018, € 1.5 billion will come from financial services. Expenditure is expected to rise to € 9.7 billion by 2021, as estimated by the International Data Corporation.
The influence of neo-banks and demanding banks is mainly in the retail segment. There is a huge untapped potential in corporate banking and private banking.
FinTech businesses need to work and try to put a foot in the door. IBM is already working with Intellect Design Arena on new digital solutions for corporate banking clients, including APIs and artificial intelligence solutions.