A focus on technology is of the utmost importance to the global banking sector, since it gives the players a competitive advantage and competence to meet consumer expectations. To better prepare for the future, a lot of focus is being placed on digitizing core business processes and reorganizing corporate structures and talents. According to The Financial Band, much of the disruptions being witnessed in the banking sector are spawned from new age, fintech startups. This is evident as banks and credit unions are now more than ever embracing fast paced innovation and encouraging the use of data analytics. The drive to become “digital banks” is also forcing financial institutions to expand reach; integrate varying payment systems; restructure delivery channels and embrace blockchain technology, among other developments.
The Current Digital Trends Shaping the Financial Sector
A lot has been written about financial technology, mostly because of the huge impact it is having on service delivery, service providers and the recipients of these services. According to a review published in Forbes magazine, here are 6 top digital trends that are currently shaping the multi-trillion dollar, global finance sector:
1. Blockchain Technology
Blockchain technology is on an upward swing. It is important to recognize that blockchain is much more than cryptocurrency. The highly secured, stop gap technology is applicable in a host of areas, including escrow transactions, loan processing and digital payments.
2. Automated Wealth Managers
One of the areas in finance where Artificial Intelligence (AI) will find an abundant use is the development of wealth bots or smart wealth managers. Aided by complex algorithms, AI bots can be trained and nurtured to execute every possible investment task; for instance, calculating interest rates, showing investment opportunities and shortlisting competitive loan providers among other possibilities. With AI driven bots, financial planners have a huge investment and advancement opportunity to stay competitive and grow their reach.
3. Big Data
Banks are increasingly tapping into Big Data to expand their scale of operation, offer efficient services and achieve high Return on Investment (ROI). An investment in Big Data also means huge time and money savings. Because of the many benefits afforded by Big Data, banking and financial institutions must find ways to invest in efficient machine learning tools to tap into these resources.
4. Mobile Banking
Mobile banking has made it easy for people and businesses to make a transaction from anywhere. Some of the services you can perform using a dedicated mobile banking app include funds transfer, making check deposits and submitting loan applications. The trend towards mobile banking is backed by research that shows the consumer is more interested in 24/7 service access and user-friendly digital assistants or apps, all at the expense of human interaction.
5. Mobile Pay
Another growing area in the mobile finance and services sector is mobile pay. A growing number of retail businesses are embracing this paperless payment platform since it is more convenient and faster when it comes to paying for products and services. It is imperative that banks and other financial institutions not be left behind in the push to serve this huge market segment considering the number of people with smartphones and similar gadgets.
6. Mobile Apps
Mobile apps have been around for some time, thanks to the digital revolution. Mobile solutions like apps are giving financial institutions and their third-party service counterparts an opportunity to integrate their services and engage customers more proactively. For instance, mobile apps, banks and third-party financial services providers can alert customers quickly about any impending development warranting their attention.
As finance firms embrace new digital technologies, cyber security remains crucial in safeguarding the gains already made. In order to secure information, firms must heighten data security and streamline access. The most important tools in data security today include encryption codes, antivirus software and firewalls. Finance corporations also need to continually train their staff on General Data Protection Regulations (GDPR) with a focus on the following key areas:
• Points of vulnerability
• Industry standards, modalities and regulations
• Real world implications of data breaches
• Understanding the role of staff in cyber security
Wasif Vimawala’s Take on FinTech
Wasif Vimawala is a strong supporter of the digital disruptions taking effect in the banking and financial services sector. According to him, these changes will hasten the production factor and offer young people new opportunities to showcase their skills and innovation. Wasif Vimawala is currently pursuing a degree in finance at DePaul University in Chicago. During his free time, he enjoys listening to music and trying out new foods. He also does a lot of research on the stock market.