We live in an era of fast digital innovations, and as technology brings us many new possibilities, some industries are required to change in order to adapt to modern times. Even the entire global financial system.
In the past couple of years, we’ve seen many changes introduced by the banking sector. First and foremost, almost all banks are pushing online banking, where you can access and manage your funds through an app.

Additionally, we’ve seen new payment methods that allow faster and simpler transactions on a day-to-day basis. But even though we’ve gone through many advancements, the banking sector still operates the same way.
This brings us to the question of the future of financial services. How modern technology like AI, machine learning, and even blockchain technology is going to affect the global financial market.
Let’s find out.
Transformation of the Financial Industry
Because of digitalization, the financial industry is likewise undergoing tremendous upheaval. Blockchain, smart contracts, and other new technologies have cleared the path for innovative financial solutions that are upending the status quo. Traditional banking methods cannot compete with the efficiency, security, and convenience provided by these new alternatives.
Then, established financial institutions saw the full potential and great demand for these new technologies and made the required investments to incorporate them to remain competitive.
Nowadays, every transaction is going digital, and people are even using financial planning software just because it saves them time and improves their decision-making process.
But what are the main changes in the banking sector?
Digital Banking
Not long ago, banks offered incentives for opening an account. Offers of tote bags and toaster ovens were replaced with promises of cheap or no fees, free checking, cash back, and other benefits. All of them were based on the idea of getting the consumer in the door so that the ‘sale’ could be made.
Certain functions are not only available but also expected in today’s digital society. It’s difficult to imagine a bank or credit card firm without a smartphone app for consumers to use to manage spending, pay payments, and more.
To take another economics term from a different context, digital banking is the “new normal.” Beyond merely accessing your account online, digital banks are becoming more legitimate and accessible.
Digital banks exist exclusively online, with no (or few) physical premises. Ally Bank and Simple Bank are two of the largest in the United States. Both have been around for over a decade, believe it or not. However, it wasn’t until 2017 that a significant figure, Chase, got involved.
Digital Disruptors
In Fintech, there is no shortage of digital disruptors. Payment technologies such as PayPal swept the industry. Others have followed the following, such as ApplePay and Venmo, and are progressively transferring more transactions to a digital environment.
At the same time, software solutions like the Genome payment platform are creating simple solutions for businesses to open online accounts, get shared access, favorable currency exchange, and all other things that a business needs in this modern time.
Stripe, on the other hand, is a payment processor that enables websites to handle online transactions, decreasing the barrier to entry for small e-commerce companies as well as startups.
AI in the Financial Industry
The Financial Services Industry has reached the Artificial Intelligence (AI) phase of the digital marathon, a trip that began with the introduction of the internet and has brought organizations through several phases of digitalization. The development of AI is disturbing the industry’s dynamics, weakening the links that have kept conventional financial institutions together and opening the door to further innovations and new operating models.
AI is transforming the quality of products and services provided by the banking industry. It has not only improved data handling and customer experience, but it has also streamlined, accelerated, and redefined existing operations to make them more efficient.
Why Banks are Pushing AI Technology?
Explosion of Data
Because of shifting client expectations, the expansion of the big data market has had a significant influence on the banking business.
Customers now interact with their banks on a more digital level, and in addition to traditional structured data, such as transactional data, organizations now collect large volumes of unstructured data, such as emails, text and voice messages, images, and videos, through customer service, social media platforms, and other data collection mediums.
Regulatory requirements
Banks are always under the eye of regulators for providing accurate reports in a timely way in order to satisfy their regulatory duties. Data collection from diverse source systems is required for regulatory compliance activities.
AI-driven solutions provide an opportunity to address some of today’s financial system difficulties by automating data-gathering operations, increasing the speed and quality of decisions, and boosting the organization’s ability to fulfill regulatory compliance needs.
Competition
Banks are always fighting with their sector counterparts, and more lately with FinTechs, to deliver the finest services to their customers. Technology has become a differentiator in this field as organizations use cutting-edge technology to capture the massive amounts of data they have.
How does the Banking System Benefit from AI?
We have already seen various sectors in financial services benefit from this disruptive technology.
- Chatbots
- Customer relationship programs
- Predictive analysis
- Risk management
- Fraud Detection System
- Final Words
Obviously, there are a bunch of changes to the entire banking system with a goal to provide better, safer, and easier-to-use platforms for people and businesses. In the next couple of years, we expect big shifts from the financial industry coming up with never-before-seen features like personal AI accountants and more.
The goal here is to try to adapt to these changes and learn how they work as soon as possible in order to stay in motion with the modernization of the banking system.