Previously, banks were in no hurry to digitalize, but the pandemic forced them to change their plans. Since then, financial technology has been actively developing, and banks provide various types of online services. Where will this trend lead? Will apps replace physical bank branches? Let’s try to figure it out.
In 1964, the first Picturephone was introduced. Video calling was expected to become a major commercial tool in the coming years. However, they came into mass use only in 2003, when Skype appeared. Almost 20 years have passed since then, and video calling is just starting to change the way we do business.
During the pandemic, video conferencing provided a new way of interacting and is now used in almost every commercial space. Large banks were forced to react quickly in order not to lose customers. But what is video banking, and how can it change today’s banks?
The term video banking refers to various types of banking services that use video to help customers. These functions use modern technologies, including machine learning (ML), with the help of which AI programs improve user interactions every time.
These technologies are used especially effectively in chat bots. They use natural language processing to recognize the client’s request. With each interaction, the responses become more personalized.
These technologies have been around for more than a decade, but bank executives have sought to cut digital spending rather than leverage it in business. Moving to digital and cloud platforms seemed costly and required intensive training.
Before the pandemic, nearly half of CFOs said they prioritized cutting digital spending. But as early as October 2020, 90% of those who were surveyed focused on upgrading capabilities, investing in technology solutions, and implementing a digital business model.
The biggest challenge in implementing video banking is maintaining consumer confidence. But many seem to have succeeded.
In April 2020, US banking app traffic grew up to 85%, and 40% of Americans said they would not return to physical banks once the pandemic ended.
74% of Europeans now manage their finances using mobile apps.
But why has the financial industry taken so long to implement video banking? It’s not just that management doubted the need for digitalization. As the number of cyber fraudsters grows, consumers are increasingly concerned about security issues.
For most clients, the security of video and audio communications, as well as the qualifications of the employee, are important. In addition, they value ease of use. Therefore, digital banks apply additional security measures such as multi-factor authentication and biometric login.
Automation is now helping to empower traditional banks. But can technology completely replace physical departments in the future? Given the widespread use of online banking, this is quite possible.
According to S&P Global Market Intelligence, banks closed 3,324 branches last year due to a massive shift to online.
To continue to operate and maintain success, it is important for banks to partner with fintech companies to help integrate their services into a user-friendly application. Otherwise, they risk losing customers. The main thing is that video banking provides the same experience as visiting a regular bank.
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