Rise of three most prominent trends in banking and financial sectors
Tags: bankingtechnolog, automationtesti, trendingtech
Published: 2022-03-09 04:53:46

Let’s consider our chances of interaction and transaction during Covid-19 when the entire world is under many restrictions. One such constraint is social distancing. The banks and financial institutions needed the channels to offer their services so that the customers do not face many inconveniences. After the initial setbacks in a couple of months, slowly, the world started adopting the new life.  
Banks and financial organizations innovated new digital technologies as some of the ways to cater to their customer requirements. The [banks](https://yethi.in/industries/banking/) and [financial organizations](https://yethi.in/industries/financial-services/) utilized the recent technologies to get into a league of trends that will refine the way we bank in the upcoming years. The following are three prominent trends in banking and finance sectors that flourished during the Covid-19 lockdown even after making its appearance in the last decades. 

- **Rise of Digital/Neo banks**
The Neo banks emerged in 2017, and their appearances disrupted the traditional banking systems. It appeared when traditional banking had created difficulties and barriers in even transactions. Neo banks leveraged technologies like artificial intelligence (AI) to provide tailored services to customers. Neo banks are digital-first financial technology organizations that utilize digital platforms or mobile applications to offer services rather than having physical branches globally.
Neo/ Digital banks focus on three most important aspects. Customers can access digital banks from anywhere. Since customers can access the banking services from anywhere and anytime there is no need of setting up a separate infrastructure or invest on training team members and manpower. It helps in cost saving and facilitates digitalization. Neo banks are receiving global approval with its digital-only and innovative approaches. 
Digital/ Neo Banks became popular during the Covid pandemic because it helped businesses flourish. Even with travel restrictions and no contacts, traders could freely trade across the borders and made the SMEs understand the relevance of modern ways of business transactions. Since the world is quickly progressing towards online transactions, digital banking is widely accepted in every nook and corner of the world. 
Information is freely available across all platforms, making it accessible for the end-users. Customers' access to financial information has become affordable, which benefits them as they can decide easily about their requirements. There is an increasing emphasis on making our daily transactions easy and convenient.

- **Real-time cross border payments**
Real-time payment (RTP) is a digital transaction between businesses and individuals that allows instant settlement without waiting for clearance. It has become highly popular in the U.S, where almost 40% of the large companies use real-time payments for cross-border transactions. The researchers believe that the numbers will also increase in the other parts of the globe, making real-time payment a highly demanded transaction method.
There is a huge risk of payment failures and delays in cross-border transactions. Real-time payment comes as a level of relief as it meets the demand of settling payments on time, eliminating the confusion, and improving efficiency in cash flow. It helps any organization gain a competitive edge for their business. 
Real-time payment has contributed a great deal towards the business advancement in the United Stated before and during Covid 19. And as the prediction goes, in 2022, the trend will rise in countries far and beyond. A recent report says that 130+ financial institutions are incorporating real-time payments into their existing operati0nal infrastructure. Federal Reserve Bank has announced the development of FedNow Real-Time Payment and decided upon expanding the operating hours of Fedwire Funds Service to meet the requirement of [faster payments](https://yethi.in/blog/payment-systems/) and avoid delays in payment settlements.
Real-Time Payments is transforming business and individual transactions forever. Both individuals and businesses are benefitted out of Real-Time Payments. Individuals no longer must wait to transfer funds from mobile payment apps to the bank account. While the processing of payroll is faster in businesses using Real-Time Payment. It also smoothens the cash flow.  

**- Emergence of Banking-as-a-Services**
Organizations face massive challenges in reducing the cost of technologies. Banking-as-a-Service (BaaS) is a trending model that delivers financial services efficiently and cost-effectively by embedding the banking products in other platforms, using open banking concepts.
BaaS is currently trending and proving beneficial for financial institutions to progress in their digital transformation journey. In the upcoming years, financial institutions will implement BaaS, which can help combine the digital platform and financial products and improve their digital transformation journey. Financial institutions have recognized BaaS as a potential option to improve revenue at a lower cost. 
BaaS helps a business deliver new and innovative services. It allows the bank to adopt a service-oriented approach that is scalable and agile. In 2022, multiple financial institutions will collaborate with many Fintechs to expand their services. It will allow banks to open new opportunities for deep knowledge about customer behavior and use [innovative technologies](https://yethi.in/blog/test-automation-development-vs-acceptance/) to improve the services.

Innovation is incomplete without a thorough quality check. Banks are fast to adopt new technologies because they must cater to a huge population while remaining relevant to their service offerings even during challenging times. But they also must test the quality of the new technologies before it goes live to ensure that the product must meet customer expectations Organizations must evolve continuously so that they do not fall behind in this competitive world. The stiff competition, steady technological growth, and desire to thrive against all odds is driving the financial industries follow the trends and utilize them to improve their services. They have also realized the [importance of testing](https://yethi.in/) and incorporating them extensively even during the software development lifecycle.