The COVID-19 Outbreak across the globe has turned the things upside down. Major industries, like healthcare, automobiles, and travel, will be completely different in the post-COVID-19 world. Additionally, it has impacted financial markets and consumer sentiments; and with the ongoing liquidity concerns and lockdown situations it seems, there’s more trouble brewing for the financial sector.
Generally, financial services represent a more conservative and traditionalist segment of the business world. They are the early adopters who embrace the new developments until they have been thoroughly tested out.
The growth of FinTech companies for a decade has resulted in a completely new and transformed financial services landscape. Development in technology, changing customer expectations, cutthroat competition, increasing regulatory complexity, the pressure to streamline operations, and other factors are driving the push for reinvention and innovation.
A senior director at Finastra, Mitesh Soni believes aspects such as big data, AI, platform-as-a-service, open APIs, and cloud are transforming the financial industry.
Top 5 Digital Transformation Trends in Financial Services
Mobile Pay Utilities
Mobile wallets are evolving every now and then. According to a report by RetailDive, around 2.1 billion customers are using mobile wallets in 2020 . And this number is bound to increase in the coming years.
A mobile wallet solution is nothing but a mobile application that tries to mimic an actual physical wallet. With the help of a mobile wallet, you can send money to other users, receive money from other users, and store money inside the wallet. Not only that, with the help of a mobile wallet, a user can also pay utility bills, buy tickets, get rewards, and many more. Popular fintech giants like Apple, Google, and Samsung have their mobile wallets services.
Mobile Wallets can be also called as a revolutionary idea that enhances the business volume eventually and a solution next to IMPS services.
This Technological development has attracted players to release their Mobile wallet services or invest in such companies. Very soon, we shall see Wallets added with more amazing features, high-end security, and more user friendly.
Blockchain might not have been an enormous success in 2018; however, it is slated to pick up in 2019. There will be more emphasis on blockchain concerning digital payments, escrow facilities, loan processing, etc.
There is also an expected use of Blockchain in RegTech, wherein processes governed by regulations need to be automated to avoid unnecessary regulation breaches. By 2024, the blockchain market is expected to be worth more than $16 billion, according to Global Market Insights, with applications related to identity and access management, forecasted to be the most profitable, with more than 90% compound annual growth rate (CAGR) from 2018-2024.
Internet of Things
“IOT in Banking and the financial services market is expected to grow from $249.4M in 2018 to $2.03B by 2023”
The Internet of Things (IoT) has significant implications for financial services institutions. While IoT devices are often more commonly associated with consumer products, the benefits of having real-time data about clients’ physical assets are invaluable to financial services companies looking to improve their current products and services, capitalize on customer purchasing behavior, and create more personalized user experiences.
Common financial services IoT applications today range from providing usage-based insurance to analyzing biometrics data to improve the credit underwriting process. However, many more will emerge and are being developed . Within an organization, IoT devices, such as smart sensors, can help improve workforce dynamics by tracking employees’ movements and working habits and reduce building management and utility costs.
The fact today is that data is everything. Banking and financial institutions are rapidly using machine learning to process data to increase effective analytical solutions out of this data. This way, banks, and other financial institutions can better serve their customers, as well as improve their overall services to bring in more investment and create better work environments for their employees and customers alike.
Artificial intelligence seems to be a long way off yet, businesses across all industries actively employ the already existing results in this sphere. They are still rudimentary, but there is no doubt that next-gen banking and financial services are going to actively use AI-based systems to profile their customers, analyze their moods, and give them financial advice. Gartner, the world’s leading research and advisory company claimed that wealth management firms that fail to start using AI advisors by 2021 are going to lose about 30% in investment management revenue.
The digital transformation of financial services is just as ingenious as it is for any other industry. Without denial, digital transformation has brought about a change in the financial services and finance industry. The digital revolution is giving rise to new technologies rapidly, which is not only transforming the finance industry but other industries as well.