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Just like the digital transformations of our day to day lives retail banking domain has also changed drastically in recent years and to be honest this evolution is just speeding up each year. From personal interactions to smart banking solutions retail banking has come along way in recent years. Technology has completely transformed various aspects of retail banking like managing your account, keeping track of transaction, sensing your financial needs and coming up with new offers for them. Every account holder must stay updated with these services to take complete advantage of these technical advancements in retail banking.

The Traditional Banking Era

If you would have to create a picture of a bank in its working hours, how would you visualize it? The very first thing that will come to your mind would be people standing in long queues, then you would picturize separate counters for cash deposits, cash withdrawals and officials dedicated to process loan applications sitting at their desks and helping customers with the information regarding the same. Now this scenario has drastically change by the development of internet banking, mobile banking, artificial intelligence and machine learning. Now, we all have faced issues like long delays, less efficient service, very poor accessibility of the banks at least once a decade ago in our experience with banking services offered the banks.

The Dawn of Digital Banking

First transformation in the retail banking came around with the outburst in the web bubble when banks started online accounts in later half of 20th century. This one development in the technical domain enabled customers to gain insights about their accounts, process their payments, transfer their funds instantaneously from the convenience of their house. This advancement increased consumer experience, cost reduction, efficiency operational and customer reach outside their physical branch network.

The Rise of Mobile Banking

Mobile technology played crucial role and is taking retail banking to new heights in terms of personalized customer experience. This development made on the go banking services possible. Development of mobile applications enabled the customers to make transactions instantly, access information instantly regarding their account, get customized offers as per their financial history and most importantly having access anywhere and anytime.

The Digital Banking Revolution

Dynamically changing customer behaviour, accelerated technological advancements and heightened competition from emerging fintech businesses led to the birth of Digital Banks. These are the banks which can be considered as virtual version of the retail banks which provide complete banking services as provided by the retails but without the need for a physical bank location. These digital banks help banks to cut the cost of operations and provide 24/7 banking services throughout the year. Digital banks provided customized and uninterrupted banking services to the generation of the customers which is more tech savvy and require quick resolution of their banking issues.

The AI Uprising in retail Banking

Artificial Intelligence has transformed operations of every industry today and banking industry is not an exception in this transformation. It has enhanced customer experience, optimized operations and improved risk management drastically. Banking industry has been revolutionized by the intervention of artificial intelligence in major aspects of retail banking.

Enhanced Customer service

Banking services are all about the satisfaction of the customers as it is people’s money which is managed and trust of customers in the services provided a bank is the deciding factor in any bank’s success. AI empowered chat bots and virtual assistants are providing services beyond simply answering customer’s queries. These bots and assistants which are based on machine learning models can not only resolve issues and queries but can efficiently provide recommendations-based customer’s preferences and consumer behaviour patterns. On the server side these machine learning models can effectively anticipate customers needs, predict future financial needs based on data from various sources and customers credit history. New marketing campaigns can be accurately designed to reach out to cater modelled needs of customers.

Accelerated Operations

Fraud Detection and Prevention:

It is just amazing that how AI based models can detect patterns real time that indicate suspicious activities empowering banks to identify and prevent fraud, security threats and money laundering activities much more efficiently than traditional rule-based systems.

Credit Scoring and Underwriting:

When it comes to money decision making for lending is of prime importance for banks. The efficient and accurate models generated by using artificial intelligence can prove a game changer in calculating credit scores to assess credit worthiness of applicants. This accuracy helps in improving decision making for lending processes hence mitigating the risk for defaults and delinquencies.

Process Automation

Iterative banking tasks such as data entry, documents processing and account reconciliation can be automated easily by robotic process automation and integration of artificial intelligence can boost this automation in terms of speed and efficiency. This gives banks an edge in allocating human resources to more value addition activities and hence provides cost saving in operations.

Risk Management and Compliance:

Market Risk Analysis

With the exceptional ability to integrate data from various sources AI driven algorithms can analyse market data along with various present economic indicators to assess market conditions so that the new trends can be identified. The analysis of these trends can help banks in optimizing investment strategies which helps in reducing risks associated with investments.

Regulatory Compliance

Automated compliance monitoring and reporting ensures the compliance with the regulatory requirements for banks. It helps banks to stay compliant with the regulations like anti- money laundering, Know your customer, and data privacy. Being compliant reduces the risk of penalties which is indirect cost saving for the banks.

Cybersecurity

Customer data protection is the utmost priority for the financial institutions and AI powered cyber security solutions can prove excellent as these algorithms can detect and mitigate threats like malwares, phishing attacks, by analysing network traffic, user behaviour and system vulnerabilities in real time which enhances the resilience and integrity of banking systems and data.

Artificial Intelligence has proved nothing less than a boon for various sectors and banking sector is not an exception. Artificial Intelligence has not only increased efficiency and accuracy for the banks but has proved exceptionally beneficial for safeguarding customer data and mitigating financial frauds. It has been successfully able to transform the issue resolution aspect of the banking and financial services. We can hence say that AI revolution has bridged a substantial gap between the banks and their customers and has proved to be asset for the society as well.

Technical innovations have done a complete makeover of the way in which banks work. It is very important for the customers to understand these advanced services so that they can use these technical advancements to the fullest. Online and mobile services provide exceptional level of access, convenience and outstanding capability to manage finances anywhere anytime.

Paradigm shift towards Digital Banking

Banking services domain in United Kingdom has undergone a very rapid evolution in recent times with the onset of digital banking, which has transformed completely the way people handle their finance. Digital banking provides a convenient, innovative and personalized services along with recommended financial solutions. In other words, it is the mode of banking which provides everything that conventional banking provides with 24/7 accessibility and convenience of customers.

Let us see the reasons why the entire world is drifting towards Digital Banking:

Convenience and accessibility:

Just observe the differences between conventional banking and digital banking you will see the reason behind the sudden shift towards digital banking globally. Digital banking provides unmatched convenience to check balances, make payments and transaction from anywhere. Mobile applications provide various services like remote check deposits, bill payments, account management just with a tap on your mobile phones. Opening an account was used to be time consuming task but not anymore. Online account opening services have made the process fast, streamlined and extremely user friendly that too without the need to visit the physical branch of your bank.

Innovation and Personalization:

Digital banks have AI powered chat bots and virtual assistants which can provide individual support, issue resolution, and provide financial advice based on customer behaviour and needs. Data driven insights are used now in order to study spending patterns and financial needs which empower digital banks to provide relevant products and service according to need of the customer. Fin tech innovations are used efficiently by digital banks to cater dynamic customer needs like budgeting applications, investment platforms where everyone can invest and efficient payment systems to make transactions fluent and seamless.

Security Features:

In any financial transaction customer data is a critical information that must be secured in order to detect and prevent any kind of financial fraud. Digital banks use encryption which ensures security of sensitive data like account number, password, and personal details. Access to accounts is secured by multi factor authentication where user is required to answer validate their identification by various forms like passwords, security questions and one- time passwords. Digital banks use various machine learning algorithms to detect suspicious activity like strange account behaviour, unapproved transactions, sudden change and frequent change of personal details and notify the customer before any damage is done to the account.

Account Management:

Digital banks have really transformed account management in aspects of accessibility and response time. We all remember how tiring it used to be to get financial statements from the physical branches of your bank. Now it is just one click in your online account and you can have the access to the information regarding your current balance giving you real time access of your financial status. Checking transactions has become really easy and simple through digital banking as it gives you instant access to detailed transaction history for the time frame you want. Customer can download account statements in an instant. These electronic statements are an excellent way to reduce paper wastage as well.

Fund Transfers:

Digital banks provide efficient platforms to ensure quick fund transfer facility to their customers. By using these online platforms customers can transfer funds instantaneously between their accounts like checking accounts, savings accounts etc. External transfers like peer-to-peer transfers, bill payments and wire transfers have also become fluent with digital banks. Icing on the cake is actually the feature of scheduled transfers as it enables the customers to schedule their payments on the date of their choice ensuring timely payments for their bills.

Customer Support:

Online banking platforms provides a robust customer service structure to cater various requirements of the customers anytime anywhere. Nearly every digital bank provides chat support service to its customers so that they can get their issues resolved by chatting with a live representative through the chat feature of their website or mobile application. Many prestigious banks have integrated artificial intelligence in the chat mode to develop chat bots that categorizes the query and enables accurate and efficient support for the queries.

Digital banks empower their customers through knowledge base in their websites so that the customers can be educated about various services that are provided by the bank. These FAQ sections, tutorials and knowledge base articles help the customers in resolving common queries and information about various aspects of the service provided.

Majority of online banks have dedicated voice and email support for their customers to ensure a 24/7 support for the customers. Banks have dedicated teams to resolve customer queries and issues like account inquiry, technical issues with the applications etc. Customers can get their issues escalated and resolved right away as there is always an executive available to help them.

Tips for Safe and Secure Banking

Even though digital banks and online banking platforms have robust information security structure. There is still some level of awareness of online security which every customer must have to ensure the safety of their banking information.

Use Strong Passwords: Your password is the key to your account information it should be something easy to guess. It is advisable to have a complex and unique password which have numbers, letters and special characters so that it becomes hard to guess. Enabling Multi-factor authentication adds an additional security to the account.
Keep Software Updated: Your accounts information is always at risk from spywares and viruses as they can have in built codes to gather the data from your device. Most people have account information and passwords stored in their devices like their mobile, computers, tablets etc. It is very important to use updated anti-virus software to ensure the information security.
Beware of Phishing Scams: Hackers, scammers or fraudsters use emails, text messages or phone calls where they pretend to be executive and try to create an emergency situation with your account. It is advised by every bank to not share your account information with anyone over the call, text message or email. They usually target the customer of a certain age who are not tech savvy and will ask information to access the account and resolve the issue which is not even there with the account.
Monitor Account Activity: People who are vigilant enough to monitor their accounts regularly and check their transaction history are more likely to find any suspicious activity sooner than people who depend on monthly account statements for the account information. The sooner you find any thing unusual the lesser will be the damage to your account.

Your investment decisions can transform your life. Simply earning a good salary alone will not assure your financial freedom, and bad investment decisions can ruin your capital or even your hard-earned money. Investment can be considered as the important factor that can either make your finances or can completely destroy your financial status. Good news is that you do not need an additional degree to learn how to invest, this knowledge can be gained by just reading few books, blogs and following the investment discipline of any successful business man or finance wizard.

The ultimate goal of the investment is to make sure that your money is actually working for you in the future. Investing is not rocket science it can be understood as simple activities done consistently to make sure that your money will grow in future. The act of investment should not be confined or restricted to only the money that you earn it must consider investment of time on self-improvement as well. People who understand the importance and urgency of investing their time and money will always be ahead of the ones who consider it only associated with money.

“Investment means the act or process of using your money for profit or material result.” The most important phrase to focus on in the definition is “using your money” so the entire result of any investment activity will depend on efficiency and effectiveness of your ability to use your money to achieve your financial goals. So, the first step should be to define your financial goals in a clear manner and setting deadlines to achieve those goals.

The next step should be to arm yourself with the knowledge about investing and deciding where you want to invest your money. In this phase you must quantify how much you are planning to invest and what is the time for which you want to make this investment. Most important characteristic of a successful investor is to know when to enter in a particular segment of the market and when to exit.

This decision of deciding your entry and exit points will not only quantify your expected profits but will also force you to find out and plan your next investment.

Once decided and planned your investment the only thing left for you to do is a flawless and disciplined execution of your investment plan and this is the part where most of the people fail. We will discuss how you can avoid distractions and progress towards your financial freedom by following your investment plan. You can only execute your plan when you can forecast what would be hurdles that you will find in your investment journey and plan a strategy in advance that you need to follow to overcome those hurdles.

Here are some tips that you can follow to create your investment strategy:

Invest in your self – The most important asset that you have to achieve your financial goal is you. Investing in yourself means that first you need the knowledge or skill set to generate a decent income stream for yourself. During this process of acquiring skills for income generation you must also arm yourself with the knowledge of investing. It will not happen overnight but the output would definitely be worth time and effort. In this digital age you can plenty of books and content that you can use to educate yourself about investing.
Resist the temptation – Now it is easier said than done. But the difference that you will observe by just learning this habit of saying no to anything that is forcing you to spend unnecessarily will save you a hell lot of money that you can use either in upskilling yourself or planning an investing in upcoming future. You have to learn to simply just avoid expenses that are not necessary.
Make room in your earnings for investment – Remember we defined investment as an act of using your money so you have to allocate some percentage of your money towards investment. You can use the most basic 50 -30 -20 rule to allocate 20 percent of your earning towards investment each month so that you are making your money ready to work for you in future. It takes time to follow good habits and its you for who you are planning and investing right so it is worth the habit.
Take a look around- You must be aware of the current trends and must be informed about the upcoming trends or the market niches because trust me an early bird does get the worm. As an investor it is very crucial to find the new horizons which can serve society and can create value for the society those are the market segments for investing in which you should prepare yourself. You never which new venture can give you amazing results and make you financially independent. So, look around, be informed and be ready to find new path breaking discoveries to invest in.
Plan for emergencies – It is very crucial to take some portion of your income towards an emergency fund because these events will make a big hole in your pocket if you are not planned and prepared for them in future. It is just not about the financial aspect that a person should plan, on a personal level as well you do not want your loved ones to suffer just because you planned to plan for them.
Take care of your health – It will not seem an important factor but your plans will suffer if you are not productive and for that you should be in good health. Make sure that you have health insurance. Include healthy habits being on budget doesn’t mean that you should not take care of your health. Healthy person has many wishes but a sick person has only one. Allocating money towards a healthy regime and a healthy diet means that you are avoiding medical expenses in future and taking a health insurance safeguards you and loved for any medical emergency that can arise in future.

It is your money and most importantly your time that you are investing for your future goals. No one is responsible for it, so it is your responsibility to be disciplined and focused on your goals. Everyone is motivated and high on adrenaline rush at the start to be the next big thing but it’s only the ones who are consistent in their efforts and willing sacrifice it all for their dreams end up being successful. Remember if you cannot dream you cannot start, but if you are not consistent you won’t finish.

Managing finance is one of the fundamental aspects of the business which not only ensures the sustainability of the business but also monitors whether the business is able to meet its important goal which is generating profit. Valuable insights regarding the efficiency of a business’ performance can be quickly and conveniently analysed by going through financial statements. Clear and thorough understanding of the financial statements like Cash Flow statement, Balance sheet, and Income statement not only provides information regarding business performance and financial needs but also ensures that informed decisions regarding finance and also makes sure that compliance and legal requirements are met regarding business operations. Hence ability to analyse financial statement is crucial to stay informed to make profitable and effective decisions and ensure that growth potential of the business is harnessed to maximum extent.

Balance Sheet

Balance sheet can be understood as a sheet which shows the assets owned by the company, liabilities that the business owes and the owner’s equity which is what is left when all the liabilities are paid off. Balance sheet is an excellent way of determining a company’s underlying financial health. It serves as a great source of information for making decisions regarding expansion which is when assets are more than liabilities and also serves as an alarm to raise profits when your liabilities are more than assets.

Balance sheets when maintained properly can provide data to calculate important financial ratios such as current ratio, quick ratio and debt- to- asset ratio which can provide quick glimpse of the state of business to the business owners and can help in decision making about various aspects of business.

Components of a Balance Sheet:

Assets: The space allocated on the left-hand side of a balance sheet is for the assets that a company owns or have created. The assets column includes cash in the accounts, inventory, hardware or equipment and the receivables that are to be obtained from the clients or customers. Intangibles like goodwill generated, the value of your brand or logo is also included in assets part of your balance sheet.

Liabilities: The right-hand side of your balance sheet is divided in to two parts and the top part is allocated to the liabilities which is nothing but detailed list of what the business is supposed to pay which can include the account payable which the business owes to the vendor’s, the debt obligations to the lenders or banks or the monthly salary obligations. Liabilities can be classified in to short-term liabilities (like account payable and short- term loans) and long-term liabilities (like mortgages, bond payable and long- term loans).

Owner’s Equity: Owner’s equity or Shareholder’s equity is placed right below the liabilities column it refers to what is left after every liability of company is paid. In small businesses owner is usually the sole shareholder.

Why It’s Important:

Financial Health: Balance Sheets are reviewed and analysed to monitor financial health of a company. Comparison between assets and liabilities gives a clear picture about liquidity and solvency of a business.

Decision Making: Balance sheets are analysed for the making the strategic decisions like expansion, investment, mergers and selling. Balance sheets provides information of balance between assets and liabilities over a certain period of times and the shift in this balance helps in making the strategic decisions regarding the business.

Financing: Balance sheets are crucial in assessing the risk and potential return on investment for the investors. If a business has created more assets greater is the return on investment and lower is the risk in lending money to the business.

Interpreting the Balance Sheet:

Current Ratio: Current ratio of a business can be calculated by using the current assets and current liabilities from balance sheet for a business. Current ratio is simply the ratio of current assets to the current liabilities. It tells about a company’s ability to pay short term debt. If the value of current ratio is lower than one than the risk of default is higher. A value greater than one usually indicates good short term financial health of a company. However, if the value of current ratio is way above one it indicates that the assets are not being properly used by the company.

Total Debt to Total Asset Ratio: This ratio serves as a metric to determine a company’s degree of leverage and solvency. As the name suggests this ratio is simply the ratio of total debt to total assets owned by the company. Higher the ratio higher is the risk for investors and lenders to invest in the business. For an example if the Total debt to asset ratio of a company is 30% it means that the 30 percent assets of the company are financed by the creditors and 70 % assets are financed by the stakeholders. Usually, ratio of 30 to 50 percent is considered to be a good Total debt to asset ratio.

Quick Ratio: Quick ratio is measure of capacity of a business to pay off its short-term obligations using most liquid assets like accounts receivables, cash, market securities and cash equivalents. It is calculated by dividing the company’s most liquid assets excluding inventory or assets which ca not be easily liquified to generate cash by the total current liabilities. High value of quick ratio indicates better liquidity and financial health. However, a lower quick ratio means that company may struggle in paying off the liabilities and might have to sell the inventory and assets to pay off debts.

Debt to Equity Ratio: This ratio is also considered as a gearing ratio as it indicates the percentage of debt a company is using to finance its operational activities rather than their own capital or resources. It is simply calculated by dividing company’s total liabilities by the shareholder’s equity. Although some amount of debt leveraging is considered good for running a business but when ratio of debt exceeds a safe value the business is considered risky by the investors and lenders to invest. A high value of debt-to-equity ratio means that the company heavily relies on the financing and hence is considered a risky venture by the creditors. This ratio can be observed over to assess the change of company’s reliance on debt.

Understanding balance sheets is a mandatory skill for people owning a business or thinking about starting a business. Businesses are run to make money and without understanding the flow of money and management of this flow of money it can become extremely tough to financially manage a business. Balance sheet provides complete information about the money which is used to create assets and the money which the business owes to the creditors, suppliers, employees etc. Analysis of various aspects like liquidity, sustainability, solvency of a business can be easily made by maintaining a balance sheet and reviewing it periodically. It is a common saying that probability of success of a business depends majorly on the ability of its owner to manage finances efficiently.

Selecting the right insurance policy is just like picking up your dentist, it might seem like a strange analogy but if we think logically all of us avoid our dentist till it becomes really painful so having a good dentist is a good insurance against future dental problems. If selected carefully insurance policy can provide plenty of benefits along with the financial security in case of any unfortunate related to health, your house, business and even in case of death. It is crucial to pick the right insurance to make sure that you are not under insured and are not overpaying for the insurance. It becomes really important to understand the insurance pitfalls to select the best insurance policy from the best insurance company.

1. Not Assessing Your Needs Properly

One of the most common insurance mistakes is to not completely assess your insurance needs like coverage requirement and risk factors that can affect your coverage. Without analysing the coverage needs and risk factors majority of people end up overpaying for their insurance and getting a lesser coverage then what is required. Analysing your coverage requirements as per the type of the insurance is essential, whether it is your health, car, home or life insurance analysing your financial situation and setting the coverage amount based on this analysis can avoid a lot of trouble in future. Analysis of risk factors like your age, lifestyle occupation and location can impact your coverage level.

Solution:

The insurance tip here would be to completely analyse the coverage requirement and consult an insurance advisor regarding the risk factors and their impact to avoid this insurance pitfall which may lead to issues like high premiums, less coverage etc.

2. Overlooking Policy Details

Avoiding key terms in terms and conditions which are often overlooked can give you really unpleasant surprises when you would be filing the claim in future. This insurance mistake is very common in United Kingdom because most people do not take the time to understand the terms used in the agreement and sign their insurance documents in a hurry. People miss the key details like exclusions in the insurance policy, coverage limits and the conditions on which the coverage is contingent on, and majorly deductibles which is the amount that will be coming out of your pocket before your insurance starts working.

Solution:

Just remember the orthodox and boring advice of reading the documents carefully before signing them because in case of insurances you are paying to covers up your losses in case if anything goes wrong and no one would like surprises if something goes wrong while filing for the claim. Complete information regarding the variables like limits, deductibles and exclusions is required to make an informed decision about insurance policy as it is very easy to get mislead by the advertisements and sugar-coated pitch of your insurance agent. If you are not sure about the technical jargon used in the agreement of your insurance policy you can always ask your insurance agent to provide complete information regarding the terms in the agreement.

3. Choosing Based on Price Alone

It is one of the most obvious insurance mistakes which a majority of people in the United Kingdom make. Selecting the insurance policy on the basis of price alone can actually take away a lot of benefits away like a decent coverage, can lead to high deductibles, and can mostly have poor claim process. Insurance is basically a service and price alone should not be a criterion to select the insurance policy. Selection of insurance policy should be fair mix of an affordable price, manageable deductibles, and a decent customer service while filing for the claim.

Solution:

Coverage provided by the insurance outweighs the importance of cost as the purpose of taking an insurance is to cover for loses due to any unfortunate incident which can be related to car, house, health, business and even life. A good balance between the cost of the insurance and coverage provided should be the most desired aspect and not the cost of insurance alone. Another important factor to select the insurance which should be considered along with the cost should be capability of the insurance provider to handle claims and ratings for the customer service. When these factors are considered together an informed decision about the insurance can be made and the blunder of selecting the cheap insurance policy can be avoided.

4. Not Reviewing and Updating Your Policy Regularly

Life is dynamic and is full of changes and so are the risks associated, with each new event in life comes the need to make changes to the insurance policy. Events like getting a new car, getting married, having children, buying a home or the most common one aging with each of these changes in your life comes the need to make changes to the policy to ensure that you are covered and secured for any unexpected event. Most people in United Kingdom make the insurance mistake of not updating the insurance policy they have. This can lead to less coverage than required and also in some case lead you make for the coverage which is not even required.

Solution:

A very simple tip to avoid this insurance mistake is to review your policy regularly to make sure that you are policy is updated with your current situation. A good practice would be to update your policy every year.

5. Not Checking the Insurer’s Reputation

An insurance policy is mainly taken to provide financial support during unfortunate times through claims for covered assets. The last thing that anyone would expect is delay in getting claims in those unfortunate times. The insurance mistake of not checking the insurer’s reputation is made either due to ignorance or due to accepting a low-cost insurance offer. This one silly mistake can severely impact the process of getting a claim and sometimes even leading to denial of claim by insurer.

Solution:

A very logical and common sense-based solution to this problem is to make the insurer’s reputation the first thing to check while selecting an insurance. This can be easily done by checking the reviews and ratings for the insurance provider on various comparison websites for insurance providers in United Kingdom. You can easily check the company stability of the insurer by the help of ratings given by agencies like A.M. Best, Moody’s, or Standard & Poor’s.

Insurances are taken to make sure that we are financially secured in unfortunate events. But mistakes like not checking the coverage, only considering cost of insurance policy, not considering the reputation of the insurer etc. will not only mess with the financial security but will also put the customer under financial stress even after having a policy. By having complete knowledge about the insurance mistakes and their solutions customers can avoid the insurance pitfalls and can secure their assets and ensure that their future is insured completely and efficiently.

The Traditional Banking Era

The Dawn of Digital Banking

The Rise of Mobile Banking

The Digital Banking Revolution

The AI Uprising in retail Banking

Enhanced Customer service

Accelerated Operations

Fraud Detection and Prevention:

Credit Scoring and Underwriting:

Process Automation

Risk Management and Compliance:

Market Risk Analysis

Cybersecurity

Paradigm shift towards Digital Banking

Tips for Safe and Secure Banking

1. Not Assessing Your Needs Properly

Solution:

2. Overlooking Policy Details

Solution:

3. Choosing Based on Price Alone

Solution:

4. Not Reviewing and Updating Your Policy Regularly

Solution:

5. Not Checking the Insurer’s Reputation

Solution:

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