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Throughout 2023, we have witnessed an extraordinary revelation for the general public: the power of generative artificial intelligence, such as ChatGPT and similar tools. But what does the future hold for banking technology? In the coming year, we will see a smooth transition to the integration of this innovative technology into banking applications, initially as virtual advisors able to answer simple questions such as "Which branch is open?" or "How do I block my stolen credit card?". However, as the years go by, these virtual advisors will evolve to offer highly sophisticated financial advice.
A large number of banking services have already been digitised and are now available on our mobile applications. Meanwhile, financial institutions are now starting to add non-financial services to these applications. At the same time, the customer experience is becoming increasingly important. The aim is to ensure that all customers, even those who are not 'digital natives', feel naturally at ease when using their banking application, and living a highly satisfactory experience.
This marks an exciting new era for the banking industry, where technology and customer service will converge to create a first-class digital experience. The future of digital banking is taking shape before our very eyes, and the prospects are promising.
The new regulations currently in force are acting as a catalyst, encouraging banks to open up their systems to digitisation while ensuring consumer welfare and offering innovative services. The Mica (Markets in Crypto-Assets) regulation, due to enter into force in 2024, provides legal certainty, paving the way for banks to allow their customers access to the world of crypto-assets such as Bitcoin, Ether, and many others. At the same time, the Financial Data Access Regulation (FIDA) requires and encourages third parties to share and access customer banking data, and subject to the consumer's consent, will offer new digital services.
Also on the horizon are the concepts of the digital euro and the European digital identity. The banking customers of the future will carry their wallet in their mobile phone. They will be able to seamlessly open bank accounts using their digital identity, take out loans or simply carry out instant digital transactions anywhere in Europe, regardless of their counterparty's bank. The future promises a barrier-free banking experience, where technology and regulation converge to create a more open, accessible and interconnected financial ecosystem.
According to an article published in Paperjam in December 2022, with the exception of Spuerkeess, it would appear that the banking applications of Luxembourg institutions are slightly behind international standards in terms of available services and user experience. This disparity can be logically explained by the matter of scale: developing an application aimed at millions of potential users requires not only mobilising more resources for its development, but also offering more advanced functionalities than those of small applications dedicated to an audience of 100.000 users.
However, when it comes to financial services, Luxembourg remains a renowned financial centre that has not missed a beat when it comes to digitising its internal networks. Luxembourg's financial institutions are adopting the latest technological solutions to ensure their long-term survival and remain at the cutting edge of digital innovation. Despite the challenges associated with its size, Luxembourg is striving to combine the excellence of its financial services with a digital experience that meets today's expectations.
The next generation will no longer refer to banks, but rather to applications. Financial institutions that succeed in their digital transition will offer services to users via an application, transcending national borders. New banks will need to carefully cultivate their digital image and expand their online footprint by regularly introducing new features, with the aim of building customer loyalty and retaining customers within their digital ecosystem.
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There is an urgent need for rapid transition to global sustainability. Business and industry have enormous social and environmental impacts. "Why does it matter?" is a bi-monthly blog that aims to elucidate this important topic through the eyes of our experts.
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