Izertis: supporting innovation in banking in constant evolution

Posted on 19 of August of 2024 .

Izertis: supporting innovation in banking in constant evolution

The banking industry continues to experience a rapid pace of change, driven by evolving customer expectations, the creation of new and innovative business models and the implementation of emerging technologies that accelerate innovation and transformation.

While innovation is not always linked to technology, in recent years developments in AI, blockchain and cloud computing have made technology the driving force behind innovation, especially in the financial sector.

"Banking is necessary, Banks are not" - Invisible, intelligent, autonomous

In the near future, finance will be part of the fabric of our digital lives

When Bill Gates uttered his famous phrase back in 1994: "Banking is necessary, Banks are not" anticipated a future in which digital banking services would prevail over traditional banking institutions. His statement was made at a time when personal computers were beginning to revolutionise the way we lived and worked. The Internet, although in its infancy, was already showing signs of its transformative potential and the power of technology to democratise access to essential services, such as financial services, began to be envisioned.

Today, digital finance is becoming more widespread, and as consumers spend more time online, they are more likely to transact via mobile devices. In this context, the digital wallets are simplifying in-app purchases, offering payment and digital identity solutions, and providing additional functions such as loyalty programmes, discounts and rewards

Invisible banking or embedded finance is becoming the biggest trend today

We can anticipate that, in the near future, finance will be part of the fabric of our digital lives. Banking will cease to be something we actively think about, and will become invisible as it becomes integrated into everyday activities, with the help of AI, voice interfaces and other emerging technologies.

It is not for nothing that invisible banking or embedded finance is becoming the biggest trend today in terms of financial services consumption habits, making it both a strategic challenge and a great opportunity for banks that know how to anticipate and seriously evaluate how to become enablers of the embedded finance ecosystem to drive their own business growth.

Buy now, pay later (BNPL) services and payments models have become two areas of embedded finance in which fintechs have achieved rapid penetration. Pioneering and innovative financial institutions are responding to this trend and transforming their organisations to capture value in an evolving market by becoming more integrated into the lives of their customers.

In the area of payments , a transition from mobile devices and cards to wearables and biometrics is foreseen, with advanced software enabling smart devices to make autonomous payments on behalf of the user, the 'banking of things'. For this vision to become a reality, autonomous and invisible technology will need to operate reliably and have a strong and robust customer service.

From Core System to Core Data- Financial Services Platforms

Under the invisible bankingscenario, data accessibility is an imperative, and the componentization/modularity of core systems and their empowerment is the biggest challenge facing financial institutions if they are to become digital, 'invisible' and smart banks. Core systems modernisation is becoming a strategic necessity for technology leaders in financial institutions and they are transforming their architectures and operations to global platforms that move the centre of gravity of data from back-end mainframe systems to the front-end. This change aims to simplify and improve the customer experience while seeking to offer an increasingly cost-effective service by integrating technology seamlessly and automatically into their operations.

The scope of AI in banking is transforming the future of finance

And it is precisely the Artificial Intelligence (AI)is the technology that is significantly driving the platform economy. It is transforming, for example, the way financial data can be aggregated beyond the boundaries of a bank, enabling new business models. By offering personal financial management (PFM) solutions, banks can leverage their visibility into customers' spending patterns to help them get better deals, disintermediating other businesses. A bank could identify that a customer has a 20-month old car leasing contract and offer a new leasing contract with a newer car from another dealer, or even a purchase option, with a lower monthly payment or financing.

The scope of AI in banking is transforming the financial future, in areas of internal process automation and repetitive tasks, detection of suspicious patterns and fraud, in customer service and in the use of chatbotsfor algorithmic trading and investment management, as well as in the area of regulation and compliance.

Real-time hyper-personalisation of the customer experience through AI and analytics will enable them to strategically manage their customer journeys, ensuring that every interaction contributes to a cohesive and satisfying banking experience.

We are going through a fascinating time in terms of innovation and transformation in financial services

In this vision of 'invisible' financial services is a technology that has the potential to amplify how users will interact with them: blockchain. Decentralised finance (DeFi) will offer a wide range of financial services through smart contracts that will automate various financial processes, ensuring the efficiency, security and transparency of users' transactions in a seamless manner. Their use in digital identity wallet solutions empower users to securely manage their information. This facilitates more efficient and faster transactions, ensuring your confidence in digital services. "Trust is the new currency when it comes to digital technology," says Satya Nadella, CEO of Microsoft.

Disruptive power of technology brings innovation to traditional business models

We are undoubtedly going through a fascinating time in terms of innovation and transformation in financial services. Banks are reshaping and redefining how we perceive and interact with them, offering a combination of security, efficiency and fluidity through customer-centric models and hyper-personalised digital services that create more meaningful banking experiences aligned to their needs at every moment.

Once again, the disruptive power of technology brings innovation to traditional business models and is the catalyst in this case for the digital transformation of the financial sectorwith digital-first, invisible, smart and eventually autonomous services .

At Izertis, we are pleased to accompany our clients in the financial sector in their digital metamorphosis processes. We combine our passion for technology with a portfolio of high value-added services, applying and integrating cutting-edge disruptive technologies. We position ourselves as a leading provider of innovation in emerging technologies, both nationally and internationally, which allows us to establish ourselves as a strategic partner for the execution of projects with the highest degree of innovation for our clients.

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