2023 is confidently blossoming as a predictive pacesetter for revolutionary banking software trends predominant in the European digital landscape. Banking systems are inevitably shifting from face-to-face transactions and slowly embracing fully digitized services. Gone are the days of 100% reliance on human input for financial assistance (e.g. data entry and document processing). In this article, we will look at the banking software trends in DE;AT;CH;PL.
Digital Banking
Banking customers are no longer required to be physically present or on-site to successfully conduct any financial transaction. The rise of digital banking services like virtual assistants, online banking portals, and mobile banking app solutions retain such customers from a remote comfort zone while meeting their financial needs on vetted cloud computing platforms.
The Polish banking sector is applauded for attaining an above-average degree of digitization globally. This Digital Banking Report summary resulted from analyzing 304 banking bodies in 41 different countries. The categorical analysis of the sampled banks sorted out 6 Polish banks with impeccable digitization footprints. The trait that attributed the Poland banks as digital champions was the advocated use of smartphones to open a bank account via a banking app. It became easier to determine the prominent financial services banking clients wanted (like personal funds management tools) instead of needing an opinion poll or campaign.
Mobile Payments
With 2025 predicted to accommodate 311 million 5G connections in Europe, consumers with smartphones continue to flexibly adapt to the comfort of making payments via mobile devices. Smartphone companies are also on a competitive quest of producing smartphone gadgets with integrated, secure, and reliable payment systems like Samsung Pay, Apple Pay, and Google Pay to lessen user banking hurdles.
Apple is tapping into the mobile banking potential of its 2 billion iPhone users worldwide through its partnership with Goldman Sachs. This partnership empowers Apple to act as a banking institution. Apple smartphone users can now access savings accounts with 4.15% annual yields. The account is not associated with any withdrawal penalty fee and does not require minimum deposits or balances. Apple users will benefit from tracking their savings and easily transferring funds from linked bank accounts from their smartphones.
75% of Android-based German smartphone users have Google Pay (the top-ranked service provider in the country) at their disposal. This payment technology disregards the need for cash or credit card and prioritizes the use of smartphones to make contactless payments via QR matrix barcode and Near Field Communication (NFC) technologies. Additionally, German banking bodies like Volksbanken credit unions and Deutsche Bank have custom-ready payment apps designed specifically for their esteemed clients.
Sustainable Finance
The yearly carbon footprint associated with the manufacturing, processing, and distribution of banking cards like Visa and Mastercard have a significant impact on global warming and climate change. In order to target and retain customers that are conscious about a low-carbon economy, most banks are digitizing their products and services to promote an environment-friendly banking environment for their customers.
Bank Austria themes itself as a sustainable finance ambassador by investing in renewable energy and sustainable projects via its GoGreen account. Users aligned with this account empower the banking body to finance socially and sustainable climate-friendly projects. Also, the Austrian Ecolabel prides itself on ethical policies through certifying projects and companies whose profit margins are directly linked to sustainable investment.
Blockchain Technology
Blockchain technology is tightening its grip on the European banking industry through its support of banking concepts like payments processing, trade finance, stock exchange & share trading, digital identity verification, syndicated lending, and credit reports. The benefits of blockchain in the banking industry are straightforward because every transaction is recorded and validated, third-party authorization is not a mandate, and the technology is decentralized. Bank blockchains beat traditional banking systems in terms of speed and affordability when handling cross-border payments. In trading transactions, information redundancy is reduced in favor of performance. Under trade finance, blockchain eliminates time-consuming paperwork as a single real-time and updated digital document comfortably accommodates all this information. When dealing with digital identity verification, users do not need to re-register their identity when transacting with different blockchain-powered service providers. Blockchain stores data verification proofs, with the data owner having total control and ownership.
The 2023 blockchain technology conferences in Switzerland are expected to be an eye-opener for investors and financial institutions. The Swiss banks will reap from the extensive knowledge base associated with these conferences. Since national/international personnel like sponsors, engineers, scholars, researchers, and exhibitors will be in attendance, the discussion on the potential dominance of blockchain in 2023 will be a highlight reel. The attendees will also get to acknowledge blockchain 4.0 application verticals like Web 3.0 and Metaverse.
Open Banking
Application Programming Interfaces (APIs) make it possible for third-party fintech (financial technology) companies and banking bodies to share user financial data like bank statements and transaction patterns, hence the concept of open banking. Changes in technology, culture, and banking regulations define Open Banking principles. The use of third-party fintech companies gifts consumers security and flexibility in their financial management routines. For instance, a user does not need to provide transaction info like account logins, account numbers, or payee details before securely sending funds or gifts via financial apps like PayPal, Facebook, or Amazon. Before these kinds of transactions can take place, the customer must agree to share their financial data via (usually) an online consent form. Afterward, exposed APIs are used to access the needed data and executed the warranted transactions. Open Banking provides access to networked accounts where lenders can assess and advise on the risk level of consumers and customers can learn from their financial patterns and situations and make better financial decisions in the future.
In terms of innovation, growth, management, and social impact, Poland highlights its top 84 trending startups and companies affiliated with fintech. Since fintech startups and companies are primarily responsible for the uprise of open banking technology, these figures (listed startups and companies) give Poland an ambassadorial status in the European market in regard to promoting open banking.
Biometric Technology
User passwords are not only memorable but also changeable. On the other hand, biometric technologies support fingerprints and facial recognition features to uniquely identify banking customers. This technology makes it complicated for hackers to remotely access and steal/compromise banking customers’ financial data. Therefore, this dominant financial software trend adds an important security layer for customers vulnerable to weak user passwords that can be compromised via prominent account hacking techniques like dictionary attacks.
Germany’s Fidor Bank is embracing the innovativeness of biometric payment cards through its partnership with the Zwipe Pay technology platform. The use of this biometric technology offers customers on-card fingerprint authentication methodologies for next-level transaction security and a seamless checkout experience. This technology adds an extra layer of security and innovativeness to digital banking and payment services.
Cybersecurity
The digitization of banking systems attracts unwarranted attention from Cyber threats. Banking bodies have taken extra security steps to protect themselves from hackers and data breaches. However, the sophistication of these attacks requires dedicated expertise to retain the integrity of stored customer financial data. Common Cybersecurity threats include the implementation of ransomware and social engineering attacks. With ransomware, an organization is locked out of its system with the demand of ransom for system re-access (which is not guaranteed). With social engineering, users are tricked into revealing important system credentials like account PINs and passwords.
Most banks have opted to partner with Cybersecurity companies with dedicated security software and intrusion detection systems to help deal with such Cybersecurity threats. Also, the implementation of security and consumer awareness training programs helps lessen the prominence of social engineering attacks.
A relatable Cybersecurity incident is the DDoS attack on German cooperative banks. As per the report, 800 financial institutions became victims of distributed denial-of-service (DDoS) attacks. The banking institutions’ networks were flooded with unprecedented traffic, making them inoperable or too slow. The banks’ IT service providers in question (Fiducia & GAD IT AG) resolved the attacks by validating the security of customers’ data through the execution of various system diagnostics. Also, updating the Cybersecurity software to weed out potential future attacks is a mandated move by most IT service providers in the Cybersecurity sector.
Virtual Reality (VR) and Augmented Reality (AR)
AR and VR technologies have unmatched contributions to the European finance industry through data visualization, payments, training & recruitment, and virtual banks. They meet the banking goals of enhanced user experience and increased efficiency. AR-powered smartphone apps and headsets are replacing the reliance on credit cards for customer payments and transactions. The use of AR and VR in training and recruiting banking staff is a flexibly empowering move in the financial sector. Also, VR technology promotes the concept of virtual banks with virtual branches for seamless offsite execution of banking activities. Both technologies save data analysts from navigating through multiple screens to make sense of user data. Presently, technologies like Microsoft HoloLens permit single-display single-analysis of abundant data (A great advantage to traders).
An augmented reality app called Swiss Banknotes is a popular topic among Swiss Bank users. Users with smartphones or tablets can position their device camera on a franc note (10, 20, 50, 100, 200, or 1000 note) to view its design element and security features. While this AR app explores new banknotes, it is yet to be vetted for identifying genuine currency notes (a future possibility). With this app accessible free of charge from Google Play and Apple app stores, it will play an important role in client involvement in the modification or design of new banknotes.
Big Data and Analytics
In the banking hierarchy, data is a top-tier resource in terms of value. The banking market continuously generates enormous data via the utilization of various financial products. The daily and periodic execution of such financial footprints leads to big data. Collecting, cleaning, and analyzing big data requires big data software to accurately identify trends and patterns needed to make scalable and informed business and banking decisions. European banks are gaining stronger marketplace positions from analytic trends, plus gaining leverage from competitors through the use of high-powered analytical software.
Big data and analytics output helps the sales and marketing teams create demographic campaigns and identify potential long-term customers. Big data also paints a clear picture of potential consumer challenges and their resolution. This technology is also useful in fraud detection and prevention via the periodic analysis of consumer behavior and transactional data patterns. Recognizing and preventing potential fraudulent activities improves customer trust levels and cuts costs that would be needed to mitigate proven fraud cases.
In Austria, prominent big data startups and companies have already taken center stage in the banking industry. The Adverity company, for instance, can help Austrian banks with marketing, sales, and e-commerce insights through its intelligent analytical and data integration techniques. Trality is another company/startup that can provide useful insights to Austrian banks in regard to investment and trading.
Robotics Process Automation (RPA)
With RPA, banking systems in Europe are able to gain and achieve automation and efficiency as key banking software objectives. Automatic ticketing systems have solved the traditional queuing approach of serving clients, which in some instances led to overcrowding and overwhelmed banking customers. Presently, most banking customers are assigned a ticket number via RPA on their visit to the bank and are promptly alerted and guided on which area of the bank they will receive the needed financial aid. Humans with data entry and document processing skill sets that previously undertook these roles lacked the efficiency, accuracy, and speed of RPA. Other notable RPA banking contributions include mortgage processing, fraud detection, report automation, account closure process, and compliance.
Since RPA technology extends to the healthcare and insurance industries, the banking bodies in alliance with these industries will reap from RPA’s projected 2023-2030 39.9% CAGR (Compound Annual Growth Rate). This statistic is in reference to RPA’s 2022 market value of USD 2,322.9 million. The same RPA market report scope quotes the 2023 RPA market value at USD 2,942.7 million. The notable increase in RPA market value from 2022 to 2023 is a green flag for investors.
Artificial Intelligence (AI) and Machine Learning (ML)
The value of conversing with a real human being to meet specific financial assistance is undeniably irreplaceable. However, numerous physical factors limit human beings as perfect customer service representatives. AI is fast and adaptable to pressure demands. European banks are making use of AI-powered Chatbots for faster responses to user queries. The evolution of these Chatbots enables them to recognize customers’ emotions and respond with the needed emotional sensitivity. Also, AI and ML collaboration has simplified online banking. It is now easier for banks to pull information from uploaded documents, hence the reason why smartphones are now convenient for uploading and depositing bank checks.
The Deutsche German bank is improving the banking customer experience via its partnership with NVIDIA to develop revolutionary banking applications. In this partnership, NVIDIA brings its accelerated computing knowledge in regard to AI and ML implementation. The Deutsche Bank also stands to benefit from using NVIDIA’s AI development and deployment software suite. ML models will be useful in spotting fraudulent financial transactions. On-premises and public cloud (off-premises) AI development and deployment are also supported.
The Future of Banking Software in Europe
Banks are creating alliances with these revolutionary banking software trends for better customer experiences, reduced costs, and improved efficiency in handling various financial services and products. Collected data helps gain insight into client behavior and preferences with an endgame of developing competitive personalized services and products. On the other hand, regulation changes like PSD2 (European regulation governing electronic payment services) are also inevitable. Overall, combining such regulatory changes with data analytics and technological innovation will pioneer the future of banking software in the European market and beyond.
