The banking sector is starting to incorporate the traits and practices that were once the domain of fintech startups. Banks and other financial institutions have become more comfortable with a quicker pace of innovation, using data and analytics more extensively and personalizing accounts as opposed to simply turning paper into PDFs. 

The importance of innovation and creating new solutions that take advantage of data, advanced analytics, digital techs, and new borrowing platforms has never been more crucial. 

Simplicity and choice in a personalized account 

In a time when every consumer wants to be able to personalize their experience, Poland’s Alior Bank developed a new checking account for its clients in the form of a personalized bank account that enables account holders to select the benefits they want. 

These benefits and features can be freely changed through a new online banking platform and new mobile app, or at any branch of the bank. For example, a client who often travels abroad and needs fast access to cash can customize their account to suit their need before they depart. Just a few clicks are required to activate or cancel a benefit. 

Extended payment functionality through biometrics

PeoPay, a mobile banking app from Bank Pakao S.A, is the first application in Poland that takes advantage of biometrics in transaction confirmations. It enables customers to pay abroad in foreign currencies and allows online shopping to be paid for directly from the smartphone. It also allows payments in all contactless terminals in Poland and abroad.

The growing number of clients traveling abroad was an impulse to introduce this unique solution. Some of its original features include:

• Paying for Internet shopping by the mobile without the need to log in to online banking.
• Approving transfers and withdrawals from ATMs with a fingerprint.
• Paying by mobile abroad directly in the local currency.

Open banking systems for corporate payments

Open banking is a new concept especially designed for banks to create more opportunities for their corporate clients. To remain compliant while increasing revenue, banks must provide a better service than the competition. This means communicating better – both internally and with trusted third-parties. 

Open banking solutions offer various features for banks. For starters, they offer a secure information exchange as data can be exchanged with TTPs through blockchain and tokenization technology, reducing the risk of opening up internal systems. Next, payments are enhanced, as they can be settled quicker thanks to information on the purpose, origin, and beneficiaries of a transaction being available whenever banks need it.

AI-driven banking

For the first time in history, the banking industry can consolidate all external and internal data in order to create predictive profiles of clients and members in real-time. With consumer information that is detailed, accessible and financially viable to deploy, financial institutions can not only know their consumers but also give advice for the future. 

This thorough use of data will enhance the client experience while increasing efficiency and security. As they move from a backside perspective of customer communication to services given by robotic-advisors and AI-based chatbots, financial organizations will give clients value through "next-best actions" as opposed to blind selling of products.

The true innovation will happen when financial organizations integrate this capability with the expanded services of open banking and connected devices. 

Peer-to-peer lending

There is no denying that peer-to-peer (P2P) lending isn’t the favorite innovation for the traditional banking sector. P2P lending directly connects borrowers – including businesses and individuals – to lenders. Through the usage of the latest techs, these platforms are popular for their convenience and speed, as well as the fact they usually bypass regulation and can, therefore, offer better rates of interest. 

P2P avoids middlemen – banks and other financial intermediaries. However, at the same time, it can also expose clients to a larger risk – by lending directly, savers do not receive the same protection as putting their money into a bank account. 

Despite the advent of P2P platforms in the global market over the last few years, financial institutions will be pleased to hear that it won’t pose a major disruption to their sector just yet. According to a report from Deloitte earlier in the year, P2P lenders will only account for around 6 percent of the lending market by 2025.

Innovation in the banking sector isn't universal, and many financial institutions need to embrace the change that is occurring in the marketplace, take qualified risks and be willing to disrupt existing business models. It all starts with innovation culture and a passion for doing things in a new way.