Technology at the service of private banking - Creand
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Technology at the service of private banking

Banking is at a crucial point in its evolution. Tech trends are redefining the way in which banks operate and engage with customers. Banks are transforming their models to enhance the customer experience, grow their business and remain competitive in an increasingly digitalised world. All with the premise that technology will continue to reshape society over the coming years.

The private banking business is essentially about and for people; customers are looking for more than basic banking services. It is not enough to know their financial needs since they also expect tailored solutions and exceptional expertise.It is therefore essential to embrace the changes in  investor cultureand understand their preferences, all of which improves customer relations, increasing trust and customer loyalty.

Technology plays a fundamental role when it comes to standing out from the rest. Banks that offer advanced digital solutions, without losing the human component, may be able to stand out from the competition and meet the needs of a customer that has changed, is increasingly better informed, more demanding and has more alternatives to choose from. Thus, technology is crucial in helping to create business.

There has been a significant increase in banks’ investments in technology and this has given rise to new strategic alliances, which means an improvement in terms of asset acquisition. A report by the consulting firm Gartner projects that approximately 20% of the total investment in digital transformation by 2026 will be earmarked for banking.

A major part of these investments is made in so-called “new banking technologies”. These tend to be used to reinforce the banks’ competitive positions, improve the customer experience and relationship, and increase efficiency by cutting down on operational costs.

The use of big data makes it possible to analyse large volumes of information efficiently. This then allows us to better segment customers and thus be able to offer personalised products and services in an effective manner. The result is a better customer experience, which benefits the business.

Artificial intelligence is emerging as a disruptive force in the industry, with applications in internal processes as well as customer service. Its use allows us to offer personalised financial advice on a large scale.

Machine learning algorithms can solve the problem of low value-added activities as they are automated and, with human supervision, this can lead to resource savings for banks.

AI also offers a major boon in the areas of regulatory compliance that are burdened with heavy workloads due to increasingly demanding banking regulations. By simplifying a large portion of the tasks, response times to customers are reduced, thus improving their relationship with the bank.

Moreover, AI offers advanced solutions in the detection of threats and potential fraud, as well as biometric authentication for the protection of customer data.

The now well-known concept of open banking facilitates the exchange of information between all types of financial institutions through application programming interfaces (APIs). Users are the owners of their financial information, so they themselves decide whether or not to share their data. It is a model that has fostered collaboration between banks and fintech firms. This will allow us to seek out alliances that add differential value to the strategy and enable the activation of synergies, thereby contributing to business growth.

Blockchain technology,for its part,has the potential to transform private banking by offering faster and more secure transactions, eliminating intermediaries and cutting operating costs, thus translating into greater efficiency and return. Cryptocurrencies are based on blockchain technology. Their adoption contributes to banks’ commitment to the digital transformation, and allows for a diversified client portfolio by offering opportunities for growth and attracting new customers interested in advanced financial solutions.

Given the rise in digitalisation, cybersecurity is a critical priority for the survival and reputation of banks. Significant investment is expected in solutions such as AI-based threat detection and biometric authentication to protect customer data in an increasingly connected environment.

Traditionally, the average age of the private banking client is high, so banks must be prepared to support the generational handover, which in many cases will be with native digital customers. Adopting customer-centric strategies will help to forge solid and long-lasting relationships, with a customer profile that is accustomed to the use of tools that allow them to be permanently connected.

Having advanced CRM technology solutions helps to centralise all the information on customers and prospects, efficiently manage opportunities and generate new business opportunities.

Published in Rankia Pro, 12.03.24