The banking industry is doing much better now than it was after the recession in 2008. The financial crisis more than a decade ago hit the banking sectors so hard that it caused the banks to lose money on mortgage defaults and freeze interbank and lending. Credit to consumers was repealed and some businesses had to close down. The prices of the stock market worldwide nosedive to the lowest it could hit.
Since then, the banking industry has been striving hard to redeem itself. Major banks worldwide who either analyzed or had to clean up the aftermath of the financial crisis, are keen to avoid the mistakes of 2008.
Now that the world is being horrified by COVID-19, the banking sector is being shaken again just like what happened 12 years ago. But now more than ever, it has come back strong. With its new strategies along with modern technologies, the banking industry will be able to conquer this recent crisis better than it did with the 2008’s great recession.
How Does Banking Sector Keep Up With the Fast-Moving World?
The world has evolved so much since the millennial era stepped in. For the past two decades, the world has seen much development and growth. The financial crisis in 2008 badly affected the banking industry was. From then on, it ensured that it will keep up to date to the ever-changing world of banking and financial services.
The sustained rising popularity of FinTtech, or Financial Technology, has contributed to the huge technological changes of how banking and financial sector provide services to its customers. It allows organization to create innovative financial products, services, and business models through leverage technology. It is revolutionizing the banking industry’s landscape. It calls for secured innovation although it still there’s still much work to do.
It aims to change how a traditional wire transfer is done. Let’s talk about how most banks still use the SWIFT system. It’s a type of electronic international wire transfer. It is widely used if you want to send a relatively big amount of money to another person internationally. It was introduced in 1970 and has been helpful.
The banking and financial sector has developed new and more convenient ways of transferring or sending money. There’s the regular remittance and the traditional withdraw and deposit system. While wire transfer is more reliable for sending bigger chunks of money. Aside from the SWIFT system, recently, the method of using routing numbers is gaining popularity because of its high security.
In the US, banks use routing numbers to identify themselves. It is different from SWIFT code as it composes of a combination of letters and numbers while routing numbers are composed of, mainly, numbers. Paypal also adapts this kind of system and came with its own PayPal routing number also.
We are in a technological era where computers and software dominate society. It’s an era of accelerated technological progress characterized by new and fast innovations. This causes an abrupt change in society since one or more technologies are replaced by another technology in just a short span of time. Online banking can be done using a mobile app or through the bank’s website.
Banks and other financial institutions introduced online banking to ease the inconvenience brought by physical bank transactions. They create their own mobile app where their customer can log in. Customers can now transfer, send, receive payments and remittance and pay their bills using the system. Online banking eliminates the need to go to the physical bank. Basically, it means a convenient but secure way of making bank transactions online.
You might think that mobile banking and online banking are the same. There’s a mere difference in their purpose. Online banking caters to sending and transferring payments or paying bills online without the need of going to the physical banks. On the other hand, mobile banking is about making sure that it’s the rightful owner of the account is the one doing the transactions.
The earliest mobile banking used SMS and has since developed to other means of verifications. One Time Pin is the code that the customer receives when making a transaction. It is often valid for only 5 minutes then expires. The pin is to be encoded to continue or verify the transaction, making it more secure. It can be done without the use of the internet thus it differs from online banking. Though both online and mobile banking provides real-time transactions.
Investment banking, however, is a type of financial service in which a person or company advises individuals, businesses, or even governments on how and where to invest their money. For many years, this has been a human-to-human process that led to a mutually beneficial relationship. We are talking about the stock market, mutual funds, hedge funds, and the likes.
But now, with the rise of artificial intelligence (AI) and robo-advisors, they are starting to infiltrate the money management and investment banking systems. Predictive analytics can help investors make wiser and more profitable decisions before the market moves. AI can also, but not all the time, identify the movement of the market.
Better Customer Service
With all the technology (FinTech), software, online and mobile banking services, the banking industry sure increased the satisfaction rate from its customers. Better services, real-time transactions just to name a few. Aside from all of these advancements, the banking sector also made sure that its customers can reach them easily through social media pages and channels and websites.
SMS and emails have been flooding the customers to give reminders and useful tips. The fast response through their customer service representatives changed the game plan on how to give excellent customer services. An increase in the number of customers reaching them through social media platforms is a good sign to reach the customers.
Undeniably, the banking industry has expanded further than ever before. From the rock-bottom in 2008, it has ascended to become stronger and more resilient to face any crisis coming along the way. This COVID-19 will test if it’s indeed prepared.
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