Top Smart Banking Tools in 2024: Enhancing Customer Experience

Photo of Aleksandre Chrikishvili

Aleksandre Chrikishvili

Updated May 20, 2024 • 14 min read

What if your bank could anticipate your next financial move even before you could?

Welcome to the era of smart banking, where technology serves as the engine that transforms tedious or routine tasks into seamless experiences. That's were the market is going in 2024.

Key takeaways:

  • Smart banking technologies are not only disruptive but also foundational, setting new industry standards for efficiency, security, and customer engagement.
  • From AI and augmented reality to chatbots and IoT, these top 10 technologies are reshaping how both customers and financial institutions perceive and interact with banking services.
  • For customers, the era of smart banking promises not only convenience but also a new level of personalized financial advisory and security, necessitating vigilance to ensure these technologies remain focused on customer needs.

The rise of smart banking

No longer are the days when banking was synonymous with long queues, cumbersome paperwork, and a one-size-fits-all approach. Enter smart banking — a paradigm that leverages cutting-edge technologies to deliver personalized, efficient, and secure financial services.

Imagine logging into your banking app and being greeted by a virtual assistant that knows your spending habits, advises you on investment opportunities in real-time, and even flags suspicious activities on your account.

Or consider the use of augmented reality to visualize your financial portfolio, breaking down complex data into digestible, interactive insights. These are not futuristic fantasies but existing capabilities already offered by forward-thinking financial institutions.

Essentially, smart banking refers to the integration of advanced digital technologies into financial services to facilitate personalized, secure, and efficient transactions and management of financial assets. Today, smart banking has emerged as a critical differentiator for financial institutions striving to outpace the competition in a digitally accelerated environment.

Top 10 tools and technologies that will power smart banking in 2024

Customer expectations are evolving, driven by experiences in other sectors like retail and healthcare, where personalization and convenience are the norms, not the exceptions. Smart banking tools serve as the focal point for meeting these elevated expectations.

A handful of technologies stand out for their ability to redefine the banking experience. These technologies are not only disruptive but foundational, setting new standards for efficiency, security, and customer engagement. We’ll delve into ten key technologies that power the smart banking revolution, each offering unique advantages to both financial institutions and their customers.

1. Artificial intelligence

For customers, AI-driven personalization engines tailor banking services to individual needs. Banking giants, such as Wells Fargo, leverage AI to deliver personalized financial insights and tailored financial offerings, from loan rates to customized investment strategies. This level of personalization enhances customer engagement and loyalty, as services feel bespoke rather than generic.

On the institutional side, AI algorithms prove invaluable for fraud detection. For instance, banks deploy machine learning algorithms that analyze transaction patterns in real-time, flagging suspicious activities that deviate from the norm. This not only enhances security but also saves the institution millions in potential fraud-related losses.

According to a 2022 survey by The Economist among IT executives in the banking industry, 85% said that their company has a "clear strategy" for incorporating AI into the development of new products and services.

AI also plays a pivotal role in credit risk assessment. Companies like ZestFinance use machine learning to analyze non-traditional data points, such as utility bill payments, rental history, and even social media activity, to provide a more comprehensive credit risk profile.

This enables banks to extend credit to a broader range of customers, including those who might not have a traditional credit history.

AI serves as the backbone of modern smart banking, enhancing both the customer experience and operational efficiency.

2. Augmented reality

Augmented reality (AR) is no longer confined to the realms of gaming and entertainment; it's making significant inroads into the banking sector, offering a more interactive and enriched user experience. For customers, AR can transform the way they interact with their financial data.

Westpac Bank in New Zealand, for example, allows customers to scan their bank cards using their mobile device's camera to instantly access account information like the current balance and spending reports. This real-time financial snapshot empowers customers to make informed purchasing decisions on the go.

AR also has the potential to replicate or even replace the traditional in-branch customer service experience. Desjardins Bank's AR app, "Your Way Desjardins," provides users with comprehensive retirement planning information, effectively transforming their homes into virtual bank branches. This not only saves customers a trip to the bank but also streamlines the advisory process.

3. Smart Know Your Customer (KYC) solutions

At a time when data breaches and identity theft are rampant, Know Your Customer (KYC) solutions have become indispensable in the financial industry. KYC solutions primarily serve a dual purpose: they enhance customer security and ensure regulatory compliance.

Financial institutions are leveraging advanced KYC platforms that use biometric verification and document authentication to expedite the customer onboarding process. This not only streamlines administrative tasks but also minimizes the risk of fraudulent activities.

KYC solutions are also evolving to incorporate machine learning algorithms that continuously update customer risk profiles. Identity verification providers have built capabilities that analyze a myriad of data points, from transaction history to online behavior, thereby enabling banks to adjust their risk models in real-time.

4. Robotic process automation (RPA)

Robotic process automation (RPA) is a transformative technology that automates routine, rule-based tasks, freeing up human resources for more strategic and customer-centric roles. RPA is often considered a form of AI, but it's worth mentioning separately for its specific applications in banking.

Unlike general AI, designed for a broad range of tasks and decision-making, RPA excels at executing predefined, repetitive tasks with high precision.

In the banking sector, RPA has been particularly effective in streamlining back-office operations. For instance, Deutsche Bank employs RPA to automate its trade finance processes, reducing manual errors and accelerating transaction times.

Moreover, RPA integrates seamlessly with other smart banking technologies, like AI. For example, JPMorgan Chase's COiN (Contract Intelligence) platform uses RPA in conjunction with natural language processing to analyze legal documents, a task that would otherwise take thousands of human hours.

5. Blockchain and smart contracts

Blockchain's decentralized ledger technology ensures that transactions are immutable and transparent, reducing the risk of fraud and errors. Financial institutions (such as Santander) have already implemented blockchain for cross-border payments, intended to reduce transaction times and costs.

Smart contracts, which are self-executing contracts with the terms directly written into code, further amplify the benefits of blockchain. They automate complex financial transactions, such as derivatives and bonds, without the need for intermediaries.

For example, the Commonwealth Bank of Australia has successfully executed a bond solely through a blockchain-based smart contract, eliminating the need for a central issuing authority.

6. Chatbots and virtual assistants

Chatbots and virtual assistants are becoming ubiquitous in smart banking, serving as the front line of customer service. Unlike traditional customer service channels, these AI-powered platforms offer round-the-clock assistance, significantly reducing customer wait times.

Capital One's Eno, for example, is a virtual assistant that can answer queries, provide account summaries, and even detect potential fraud — all via text or voice commands.

These virtual assistants are not limited to basic tasks. They can handle complex queries and even offer personalized financial advice. For instance, Cleo, an AI-powered financial assistant, analyzes spending patterns and offers tailored budgeting tips and investment advice.

The value of chatbots and virtual assistants extends beyond customer convenience. They also collect valuable data on customer behavior and preferences, enabling banks to refine their services and offer more personalized experiences.

7. Cybersecurity solutions

Cybersecurity solutions in smart banking encompass more than mere firewalls and antivirus software. They utilize advanced technologies such as machine learning and behavioral analytics to proactively identify and mitigate threats. These solutions recognize unusual activity within a bank's network, allowing for real-time responses to potential security incidents.

Cybersecurity tools play a critical role in safeguarding sensitive customer data and ensuring compliance with evolving regulatory standards. They also provide protection against a broad range of threats, from phishing attacks to advanced persistent threats.

Additionally, cybersecurity measures bolster customer trust, a vital asset in the financial sector. Customers are more inclined to engage with banking platforms they perceive as secure.

8. Open banking APIs

Open banking APIs (application programming interfaces) act as the connective tissue in the smart banking ecosystem, facilitating seamless interactions among various financial platforms and services.

They provide a standardized means for banks, fintech companies, and third-party providers to securely share data, thus promoting innovation and competition within the industry.

For instance, Plaid, a fintech company, utilizes Open Banking APIs to link users' bank accounts to diverse financial apps, enabling services like personal budgeting, peer-to-peer payments, and even cryptocurrency trading. This level of interoperability enhances customer choice and convenience, enabling a more personalized banking experience.

Moreover, open banking APIs aid in regulatory compliance by ensuring that data sharing adheres to stringent security standards. They also empower banks to explore new revenue streams by offering API-based services to third parties.

9. Mobile banking

A lot of banks have slowly empowered their customers to open accounts, deposit checks, transfer funds, and even apply for loans, all from the convenience of their smartphones. This level of accessibility not only enhances the customer experience but also reduces the operational costs associated with in-branch services.

Mobile banking has progressed from being a convenient alternative to traditional banking to becoming a cornerstone of the consumer banking experience. Currently, as of 2022, 78% of adults in the US prefer conducting their banking through a mobile app or website, while only 29% of Americans favor in-person banking.

Features like instant payment gateways, budgeting tools, and secure payments have revolutionized how customers manage their finances.

Many banks have progressively enabled their customers to open accounts, deposit checks, transfer funds, and even apply for loans, all from the convenience of their smartphones. This level of accessibility not only enriches the customer experience but also reduces the operational costs associated with in-branch services.

10. Internet of Things (IoT)

The Internet of Things (IoT) is expanding the horizons of smart banking beyond traditional platforms, introducing a heightened level of connectivity and data-driven insights for both consumers and financial institutions.

IoT-enabled devices, like smart ATMs and wearables, provide real-time updates, transactions, and account alerts, significantly enhancing customer convenience and operational efficiency.

For example, Wells Fargo has conducted trials with IoT-connected ATMs, offering personalized user experiences such as preferred withdrawal amounts and account settings based on customer behavior.

Likewise, wearable devices like the Apple Watch are being integrated with banking apps, providing on-the-go account monitoring and transaction capabilities.

The final ledger: What smart banking means for you

The ten technologies we've explored aren’t merely disrupting traditional banking; they're redefining how we interact with our finances. From AI-driven personalization to IoT-enabled real-time updates, these tools are setting new benchmarks for efficiency, security, and customer engagement.

But what does this mean for you, the consumer, or for financial institutions striving to stay ahead of the curve? For consumers, the benefits are manifold. Imagine a world where your bank not only understands your spending habits but also offers real-time advice on investment opportunities, or where you can access a comprehensive view of your financial portfolio through augmented reality.

For financial institutions, the stakes are equally high. Adopting these technologies isn’t just about keeping up with competitors. It's about setting new industry standards and reimagining the very essence of banking. Institutions that fail to adapt risk becoming obsolete, overshadowed by more agile and technologically adept competitors.

Moreover, these technologies offer not only operational efficiencies but also new revenue streams, from API-based services to data-driven personalized offerings.

As we look to the future, one thing is certain: the line between technology and banking is blurring, and fast. The question is no longer whether banks will adopt these technologies, but how quickly they can integrate them to deliver a truly seamless and personalized experience.

As consumers, we should not just be excited but also vigilant, ensuring that as our banks get smarter, they also remain secure and focused on our needs.

In the era of smart banking, technology is a catalyst for transformation. And as we've seen, this transformation is already well underway. Are you prepared for what comes next?

Photo of Aleksandre Chrikishvili

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Aleksandre Chrikishvili

Commercial Lead | Finance at Netguru
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