Gulf News Does unconventional banking cancel the traditional system?

Every crisis the world goes through generates new opportunities. For example, the global financial crisis that struck in 2008 generated new needs. These needs gave birth to companies like Uber and Instagram, which developed into giants within a short time of their founding. The current health and economic crisis resulting from the outbreak of the Corona epidemic has created an urgent need to provide electronic payments and unconventional banking. These services are provided by institutions that are not necessarily banking, such as Amazon, Google, and other new non-traditional banking service providers. Will unconventional banking and the new providers of banking be the future of the banking sector after the Corona pandemic?

The technological revolution in the world has entrenched the idea that the service provided by any institution must keep pace with the times in terms of speed, and method of presentation. With this trend taking hold, the banking sector is expected to keep pace with this technological revolution in order to increase customer satisfaction and comfort, and the epidemic has doubled these expectations. Therefore, after the pandemic, unconventional banking based on artificial intelligence will be not only the future of financial and banking institutions, but also the future of non-traditional institutions such as technology and Fintech companies, but also telecommunications.

The development of banking technology led by the new non-traditional banking providers will fundamentally change the face of the banking and financial services industry. So that in the near future, we will see the emergence of many non-banking companies, which are developing technological methods to provide traditional banking and financial services in an advanced, fast and efficient way. For example, it is not unlikely that we will see technology or telecommunications companies in the near future issue letters of guarantee or letters of credit in an innovative way. What enhances the chances of success of these companies in the banking sector is that many people in the world do not have bank accounts, but they have smart devices and Internet networks, which increases the chances of their banking dealings with non-banking companies. The customer will be the first beneficiary of this technological revolution in financial and banking transactions, not only in terms of speed, but also in terms of convenience and cost.

This unconventional approach in the financial and banking sector has been well received by customers. Recent studies conducted in the United States of America have shown that a large percentage of customers from the age groups under forty years prefer non-traditional banking based on artificial intelligence, and open bank accounts with newcomers in the sector. The pace of this trend has increased recently with the spread of the epidemic, as many customers have refrained from visiting bank branches and have largely accepted the use of digital platforms, while some prestigious banking institutions have closed thousands of their branches.

In order to catch up with this unprecedented development in digital and non-traditional banking, traditional banking institutions will need not only to improve the use of technology, and to replace many of the traditional customer transactions with digital, but to create an ecosystem in alliance with technology companies, Fintech, and telecom companies. Consequently, integrating digital technology into its business and networks, creating strong and scalable digital platforms that rely on open banking services, and providing comprehensive banking services mainly through mobile phones and smart devices.

This technological banking revolution will make the traditional banking system in the world face two possibilities, either seeking to catch up with this revolution in the technological banking industry and lead it. Or handing over sector leadership to new bankers and vanishing over the next few decades to become part of the past. Only time will prove it.