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Education

Top nine trends to watch in banking

and payments in 2023

Cryptocurrencies and blockchain
A 2021 BIS survey showed that about 60 percent of banks
were considering adopting central bank digital currencies
(CBDCs). Digital currencies have become more prevalent
in most countries as more governments and financial
institutions explore the potential of cryptocurrencies and
blockchain technology. For instance, Jamaica, the Bahamas
and Nigeria have launched CBDCs.

Thanks to this, the decentralized finance (DeFi) market
size has also grown as more consumers turn to this
technology, since it involves secure digital wallets that
can transfer money in minutes without intermediaries.
Therefore, banks must adopt payment technologies to
By Walter Akolo and Shubham Garg compete with this emerging technology.
iCheckGateway.com Biometrics and identity verification

he banking industry is radically transforming. As digitization progresses, the risk of identity fraud
The sector experienced strong revenue growth increases. Banks now use biometrics such as fingerprints,
once the effects of the pandemic reduced; how- heart rate sensors, and voice and facial recognition to
T ever, the growth margins are now shrinking. authenticate customers. To improve security, banks
Additionally, a looming uncertainty festers due to global must partner with payment processors that offer
geopolitical and economic issues. these technologies. This will reduce the scope of PCI data,
network and device security standards; minimize identity
According to data by McKinsey & Co., banks reached a fraud; and identify suspicious transactions.
14-year high profitability in 2022, and the revenue grew
by $345 billion. This happened due to rising interest rates Artificial intelligence and machine learning
and net margins in the sector. As we look into the future, Fraudsters are becoming more daring by targeting bank
the banking industry has to restructure to accommodate systems through hacks. Modern banks rely on artificial
the new trends and challenges.
intelligence and machine learning for risk assessment,
fraud detection and boosting customer service.
With the shift toward digital technologies, especially in
payment processing, banks must realign their processes For instance, machine learning identifies customer
around customer needs. This could be a huge opportunity patterns, performs authentication tests and builds a
to earn new revenue streams and higher margins. This suspicious activity monitoring system. Therefore, if a
article takes a look at how changing consumer preferences bank needs to process checks via the ACH network, it can
and technological advancements drive new banking and use machine learning and AI to verify the checks.
payment processing trends.
Open banking and APIs
Digital banking
The open banking model allows banks to share financial
The banking sector increasingly shifts towards digital and consumer transactional data with third-party
banking. Payment ecosystems changed since the beginning institutions using application programming interfaces
of the pandemic in 2020 as more customers moved their (APIs). Therefore, banks can share account information,
preferences to digital and contactless payment models. age, location, credit score, transaction information and
Because of this, online banking platforms and mobile income—with consent from the customer.
banking apps became more prominent.
There's potential for innovation and increased competition
Statistics show that the number of active online banking in the sector So, bank managers must adopt these models
users rose by more than 2 billion in 2022. This number to partner with companies offering advanced payment
will continue to grow with the introduction of digital- processing solutions like email invoicing.
only banks, also known as neobanks. These new banks
don't have physical branches; therefore, they have more
streamlined operations to attract younger customers.
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