The banking industry is going through a revolutionary overhaul, with the majority of it coming about through the adoption of leading-edge technologies and the emergence of fintech participants. The change is not only about converting traditional processes into digital ones but redesigning the very banking experience to accommodate the changing requirements of modern-day corporate and consumer clients.

The Shift in Technology Strategy

Historically, banks were dependent on third-party technology service providers to provide customer experiences. There is a fundamental change taking place where banks are in-sourcing the technology that interacts with customers directly—popularly referred to as the customer engagement or front-end layer. With this strategy, banks can have more control, agility, and flexibility in providing a frictionless and cohesive experience on a range of products beyond payments.

Though fundamental product processing remains reliant on collaborations with technology firms, a customer engagement layer owned by the bank ensures consistency and a tailored experience for customers. The model refines customers' engagements with banking products, whether they are starting transactions, managing financing, or conducting foreign exchange (FX) and investments.

Breaking Down Organizational Silos

Another important shift in banking technology management is teams' alignment. Earlier, various departments used to work separately on different components of the banking technology stack, which would create delays and inefficiencies. Today, banks are adopting a more holistic model where all teams involved in technology delivery and customer experience are aligned into one leadership point.

This integrated governance promotes improved coordination, timely implementation, and elimination of silo-based bottlenecks, finally leading to quicker and more assured rollout of technology-based solutions.

Harnessing the Power of Data and AI

The banking industry is increasingly interested in how to best leverage data and artificial intelligence (AI) to enhance financial as well as operational efficiency. Although AI continues to be top of mind, the focus is ultimately on finding tangible real-world applications that truly bring value to corporate and retail clients. This can vary from more intelligent credit evaluation and risk management to automating repetitive operation tasks.

The ultimate goal is to enhance the customer’s banking experience by making it more intelligent, efficient, and personalized through the smart use of data-driven insights.

Unified Product Journeys

Banks are transitioning from isolated product offerings to integrated solutions that view the customer journey holistically. Whether it’s initiating a payment, securing financing, handling FX transactions, or managing limits and investments, these touchpoints are now stitched together into one continuous experience.

Such consolidation allows customers to no longer struggle with fragmented services but rather a smooth flow mirroring their business or personal financial requirements end to end.

Observability and Transparency

The exponentially rising transaction volumes make transparency ever more imperative. Banks are spending generously on observability stacks—layers of technology that enable both the bank and its customers to track transactions in real time.

With dashboards and live tracking systems, customers are able to see where their transactions are and when they will be done. Not only does this decrease stress, but it creates trust, an important currency in banking relationships.

The Increasing Role of Fintech in Transaction Banking

Transaction banking used to be the preserve of banks, but now fintechs have become strong disruptors. The growth in digital volumes—from as low as 25% a few years back to nearly 99% now—reflects the rising digitization of bank services.

Fintech companies add enormous value by integrating several banks to offer single multi-bank views to customers, increasing convenience and choice. This functionality is one that banks individually have not been able to provide, with their low interoperability.

Collaboration Between Banks and Fintechs

The future of transaction banking is in partnership and not competition. Banks and fintechs have complementary strengths to offer. Fintechs innovate and develop customer-led solutions at a fast pace while banks offer trust, regulatory knowledge, and infrastructure at scale.

Banks-fintech partnerships can boost innovation in cross-bank payments, customer onboarding, and financing products. Joint initiatives can source new customers and fuel growth for both parties.

But more robust regulatory guidance on data sharing, security, and commitment for the long term is necessary to encourage these collaborations. Well-defined structures will enhance mutual trust and provide an environment that is favourable for innovation and customer gain.

The Customer as the King

Ultimately, all technology and innovation must serve the customer. The goal is to create solutions that improve efficiency, convenience, and financial outcomes for corporate and retail customers alike. Whether through better product integration, transparent transaction monitoring, or seamless multi-bank access, customer experience remains paramount.

The banking landscape will continue evolving rapidly, and those institutions that adapt to technology and forge meaningful partnerships with fintechs will lead the way.

Watch the Full Episode

For an in-depth look at how technology is transforming banking and the thrilling path forward for fintech and banks, watch the full Episode 6 of Escrow Talks: Banking in the Era of Fintech – Insights and the Path Forward. Get expert insights into utilizing innovation to build seamless customer experiences and construct the future of transaction banking.

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