Current Trends in the Innovation Process within the Global Banking Industry

Abstract

The global banking industry has constantly evolved, undergoing processes such as internationalization, banking concentration, liberalization, diversification, universalization, and globalization of activities. The most recent changes include the modernization of banking technologies and the development of alternative communication methods, which have revolutionized the sector, creating real competitive advantages through the implementation of high-performance information systems and the personalization of the bank-client relationship. This gradual transformation, alongside the creation of the digital economy and the integration of innovations from the 5.0 and 6.0 technological revolutions (where 5.0 focuses on the integration of advanced technologies like AI and IoT into industries for smarter, more connected environments, and 6.0 envisions further advances toward human-centric innovations and automation), has led banks to adopt the Banking 4.0 concept (which emphasizes the use of IT and AI technologies to offer personalized, on-demand banking services anywhere, anytime). According to the Banking 4.0 concept, banking activities integrate IT and AI technologies, enabling the provision of banking products and services at any time, regardless of the client’s location. The research conducted shows that, globally, there are several innovative types of banks: platform banks, digital banks, including virtual banks, and OEM banks. Moreover, with the implementation of the Banking 4.0 concept, complementary non-banking models have also emerged. This article analyzes current trends in the global banking innovation process, based on a review of specialized publications in the field. It highlights the advantages and benefits these innovations offer, as well as the challenges encountered in promoting the innovation process. The study identifies key trends, including the digitization of banking activities, ensuring banking security, the rise of banking self-service, hyper-personalization, and the improvement of customer experience, among others. In the context of digitalization, coupled with pressures such as declining profits and changing customer preferences, experts argue that banks must address all aspects of the innovation process. This begins with a radical transformation of the business model and extends to the implementation of open banking and smart banking, which can take various forms. The global banking industry has adopted and integrated a wide range of new tools and technologies. Banks are increasingly implementing these innovations to bridge the existing gap and enhance their competitiveness in the financial sector. UDC: 336.71:001.895; JEL: E40, E44, G20.