Banking Evolution: The Changing Landscape of the Financial Sector
by Yuvi K - December 16, 2023
Banking Evolution: The Changing Landscape of the Financial Sector
The financial sector has seen drastic changes in the past many years. Banks have gone beyond just a safe place to store money and are now transforming the way people interact with money, its storage and usage. In this article, we take a look into the evolution of the banking system, how it has transformed in the last few decades due to various technological advancements and see what the future holds.
From Traditional Banking to Digitization
The first banks in the history of mankind started somewhere in 2000 B.C. The then transactions were carried out in currencies and commodities like barley and silver. With technology and advancement, banks began using paper notes, which were eventually replaced by coins. By the 19th century, more modern technology was brought into banking, evolving from manual paper-based processes to automated ones.
The emergence and transition to the Digital Age
The 21st century saw the emergence of online banking and digital forms of banking transactions, brought about by the arrival of digital technology. This marked the transition of the banking industry from physical to digital. Banks in the modern world operate and function in the cloud, interconnecting the different aspects of banking activities, providing users with a more convenient, safe and secure services.
Overview of the Static Banking Model to Dynamic Model
The static banking model followed the traditional banking system where physical paperwork was followed till the end of transactions. However, with the drive towards digital banking, this model has been replaced by the dynamic model. In the dynamic model, customers are able to access the same services offered by the physical banking system through the internet, using the bank’s app or website.
Banking-as-a-Service (BaaS) – From Selling banking Products to Providing Services
The Banking-as-a-Service (BaaS) model has revolutionized the banking sector over the years. This model of banking from Financial Services Organizations (FSOs) – through their APIs – provides third-party solutions for banks who are striving to remain customer-centric, giving customers the opportunity to access services like account opening, payments, foreign exchange and many more.
AI-driven Banking
The use of artificial intelligence (AI) in banking has changed the way customer service is handled in the banking system. AI-driven banking solutions has enabled banks to automate tedious and repetitive tasks, giving customers access to improved service tailored to their needs. For instance, AI can identify changes in customer behaviour, lifestyle and spending habits, helping to anticipate customer needs. AI-driven banking solutions can also help banks improve customer data security and detect fraud.
The Future – Block Chain Technology, APIs and APIs for Banks
The future of banking is undoubtedly very bright. Banks are already leveraging blockchain technology to make operations more secure and transparent. APIs have enabled banks to interact with third-party services in a much smoother way. And banks are continuously improving and updating their APIs to provide innovative solutions for customers.
Conclusion
The banking sector has made monumental changes over the years, from the traditional banking model to the dynamic and digital banking model. With the emergence of technologies like blockchain, AI and APIs, the future holds even more revolutionary banking solutions. Banks are constantly striving to provide more convenient and secure services for their customers, making the banking sector an interesting and evolving one.
