The most critical technologies changing banking  

It all starts with the cloud advantage. 

Nearly all the significant tech changes revolve around the cloud. That's because banking in the cloud offers a host of digital banking services, like data storage and analysis. Banks can even use the services native to the cloud, like business process management, which is managed by the cloud provider. 

With the cloud, banks can connect to a host of third-party services, leveraging the technology ecosystems of core banking providers. These services give many application design options and reduce innovation barriers via pre-developed functionalities. This is opposed to closed legacy systems, where it's challenging to integrate new technology.  

Cloud banking also allows banks to scale faster, cheaper, and better meet customer demand. This is especially important now, where customers need 24/7 access to financial products, and banks need to future-proof and scale their technology. A speed and agility that's difficult to reach with on-premise systems due to limited capacity and capped maximum output.

Better connectivity via APIs and composable banking. 

When it comes to connectivity in cloud-based banking, what gets the job done are application programming interfaces (APIs). These link applications to backend systems make extracting data from products and services much more accessible, enhancing customer experience.

While we're talking APIs, mentioning composable banking is also interesting. Composable systems are cloud-native and allow banks to create functionality by switching components in and out using open APIs to meet the user's requirements. Integration layers, which can also orchestrate and choreograph processes, ensure all these APIs work together. 

Composable banking also lowers costs as it's a software-as-a-service offering—buyers pay for what they use. This means banks aren't limited to a fixed set of vendors or any single banking suite and can use best-in-class fintech solutions through partner ecosystems offered by core banking providers. For example, if a credit or KYC solution is needed, they can simply be connected from the ecosystem, significantly increasing agility and time to market. 

Zero trust for modern security. 

Security used to be a big concern when it came to the cloud, but not anymore. Billions are spent by the big cloud providers—Amazon, Microsoft, and Google—to make sure it's secure and ready for modern security. For example, zero trust is the leading method for cybersecurity in a world where we work remotely, banks use third-party apps, and cyber-attacks are increasingly complex. 

Zero trust means no device, user, or network should be trusted because it's from a specific company or location. This uses continuous validation, authorization, and authentication across the entire bank, which is only possible with the open nature of the cloud. Combining the cloud and zero trust leads to lowered operational costs and complexity, the ability to strike a balance between business and security needs, and gives a complete view of risks, assets, and the lifeblood of every bank: data. 

Unlocking data.

As previously mentioned, data can be stored in the cloud, which is vital in making it available across an entire bank and an whole ecosystem around it - but this is only one part of the equation. 

Data access is the other part. Here, an effective approach is distributed data architecture. This data mesh model makes data available whenever it is needed. Data is stored in specific domains, for example, risk, post-trade, payments, or finance, and is used in read queries and real-time recalls. 

What we're dealing with, then, is an event-driven architecture. This means users can be notified when changes are made to products, services, and customer information so that appropriate actions can be taken.

Consequently, clear audit trails for compliance are created, helping banks better manage risk. This is key as we're moving towards continuous compliance. To illustrate, imagine you have a mortgage loan. You lose your job, and this information is updated in the bank's core system. This triggers an automatic message via post, recognizing your situation and saying someone will reach out. When they do, they offer to lower your mortgage payments until you get back on your feet. This leads to better customer retention, and the system updates involved mean relevant information can be accessed for compliance needs. 

But it's not just about data being available. Data also needs to be analyzed to produce useful insights. This is where technologies like Machine Learning, Artificial Intelligence (AI), and edge computing come in. Here, increasingly sophisticated AI can be used across the front, middle, and back offices, from conversational banking to risk management and underwriting. 

How to do technology better.

There are a lot of tech banks that can use to modernize their systems. But before banks add even more tech, they should sit back and consider business needs. What is the strategic vision? What are the target markets, segments, and products? What type of organization do they want to create? 

These questions are important to answer because tech serves purpose and people. From here, banks can design a proposition for a new banking system or operating model. They may go cloud-native, run a hybrid model, or choose Google over Microsoft as a cloud provider.

Whatever they do, they must have processes to introduce, implement, assess, and re-assess tech decisions. This way, banks will ensure they're prepared for whatever the future has in store.