Like other sectors that we have spoken about, the financial sector has recognised the potential for digital solutions, strategies and developments that are changing the face of our current economy.
However, digital ecosystems require more than just adopting change. To achieve resounding success, the institutes should go through structural reforms across external and internal processing systems. Organisations are now investing in technology to speed up their business endeavours as well as to differentiate from their competitors in the financial sector. Fintech is attracting customers with convenient services and products that have emerged from a single-source technology.
How Can the Financial Sector and Digital Transformation Integrate?
The transformation brought in by the digitalisation is more on the customer-front experience. The digital growth is directly proportionate to the convenience a digital product can provide to its’ customers. For example, credit companies and banks are now providing mobile facilities and experiences to their customers and eliminating hassles of visiting a branch for petty transactions and formalities. However, financial institutions like capital and equity markets still rely on age-old systems that run on IBM frames.
By taking a customer-centric approach, financial service providers are aiming to make their customer’s lives easier and unlocking opportunities in the functions of the financial domains like the capital market, credit facilities and banking. Using the right mediums of tech, the financial sector could outgrow their efficiency and surpass their own records when a successful implementation of the digital workforce can take place.
Impact of Finance and Digital Transformation
It goes beyond making digital products progressive and reaching out to their clientele, the Fintech industry takes digital transformation to develop an ecosystem of business models that call for an equality of participation from all corners of the sector.
Beyond the teams of people, the transformation majorly takes place in the capitalisation of new tech that could further enable the introduction of digital tools to enhance efficiency and productivity in the financial sector. An example of this is the transition from hardcopy documents to secured HTML or PDF formatted documents. Keeping in mind, it does come bearing risks of its own. The advent of cashless payments, mobile banking, and e-wallets have hiked the security threats cases recently. Tasks like making journal entries, depositing bills, allocations and receiving operations can now be assisted by replacing human involvement with robotics.
The financial sector has come up with strategies to implement automation and digitally transform the process. The act of automation comes with a set of regulations and rules that assist in achieving the high-performance goals and mitigate the operation risks.
Being strict on the guidelines of the applications, Fintechs must move on the lines of improved customer segmentation. Secondly, the enhancements in the design of products, services and promotional capabilities can shift from physical channels to a digital platform. The repetitive tasks like reports, analysis, accounting and similar operations can now be executed with robust strategies of the tech that minimises the errors and possibility of cyber risks.
There are specific tools for Fintech that serves the industry with systems focused on improving the existing systems that have been put in place.
- Data Visualisations
Data storage is a key area where there are multiple departments have struggled to maintain a uniformed funnel. The data visualisations gain insight by tracking the performance and trace the interactions that can forecast or predict current or future performances. This can be utilised to base decisions for profound improvements in the next stage of development.
The introduction of robotic automation in the financial sector brought down the communications and processes to a minimum. Tasks like allocations, depositing bills and making journal entries can now be assisted by robotics and assist human involvement. Though the implementation is still in testing phase, banks have started installing bots at the entry gates of the branches.
- Cloud Computing
The tech expedition has come up with the introduction of cloud computing. The financial sector took the advantage to enable effective interdepartmental collaborations using SaaS-Based cloud applications. Tasks such as Human Resources and accounting is included in this and the core systems were incorporated and integrated. However, for functionalities like billing, payments and credit scoring, the same cloud structures cannot be used because the risk of personal data breaches cybercrimes is so high.
The preferred tech in the financial sector is Blockchain. This amalgamation ushered financial services in a new digital era in its truest form. Blockchain has empowered a new form of currency called cryptocurrency where the set of blocks of data is considered as a currency that you can exchange online. This is a breakthrough and the financial sector sounds promising as it limits the chance of fraud, addressed money laundering and this effectively pumped trading measures in the financial market. However, Blockchain has a long way to go and challenges to overcome.
- Advanced Analytics
There are various sectors in finance itself and it becomes a task to channel the massive influx of customer data. Therefore, Artificial Intelligence (AI) is leveraged to effectively use advanced analytics that can anticipate customer behaviour. The algorithms of machine learning can identify the customer trends and analyse an online pattern that can be put to their advantage. For example, the apps store more frequently used services and then give suggestions based on it.
What Does the Future Hold for Fintech?
According to a study conducted in 2019, 65% of banks have reached or are on the path to digital transformation. The two-dimensional platforms that serve both parties involved, advisors and clients, will take on these advancements. It will empower and shape the ecosystem by embracing new tech and tapping into the digital maturity of most today’s customers. With each new phase, the customers are also bridging their knowledge gaps on a learning curve of tech. It is only a matter of time before we witness a blooming of the financial sector where digital tools are used to bring an improved customer experience.