The Marriage of Finance to Technology
The infusion of technology in the finance sector is probably one of the best outcomes of the tech wave. Digitizing financial services has been a boon both for the consumer, and financial institutes. Did you know, in 2019 alone, the total transaction value of digital payments was US$4,137,523 million! This number proves that consumers are actively using digital finance services. Moving to the other end of the spectrum, the global value of investments made in Fintech companies in 2018 was approximately 112 billion U.S. dollars. This number shows the growing interest in Fintech companies.
The reasons for digitizing financial services are quite simple:
- Faster service and results.
- Benefit of remote services.
- The ability to automate.
- The availability of insights and analytics.
- Omni-channel customer service.
- Opportunities to cross-sell.
- Cost efficient.
- High availability and accessibility.
- The capability to service unlimited clients.
- In stride with modern trends.
These are 10 of many benefits a financial institute can gain by digitizing their services. AI and Machine Learning are making platforms smarter, and digital workers are helping businesses scale to never before seen heights. In fact, we recently write a knowledge article on the 5 Ways AI is Being Used in Fintech Today [Resulting in Happier Customers].
Businesses today have only two choices: ride the digital wave, or get washed off to shore. In this article, we are talking about 5 Fintech trends that will become prominent (or more prominent) in 2020.
These are the trends every financial institute needs to look out for
1. Neobanking & BaaS platforms
Neobanking, or Baas (Banking as a Service), basically both stand for digital banking (or financial servicing) without the need for a physical presence through a brick and mortar establishment. A neobank can provide specific services or a wide range of financial services, all provided and accessed digitally. Established financial institutes like Kotak Mahindra Bank, Paytm, Bharti Airtel and DBS have already introduced forms of digital-only banking services. Businesses need to jump on this trend and migrate most, if not all, of their services on to a digital platform. Why? Because a survey showed that customer visits to physical bank location will drop by 36% between 2017 and 2022, while mobile bank transactions during this same period will rise by 121%.
2. Use of Blockchain (or equivalent solutions for authenticity)
Block isn’t a new technology, but to finance it is relatively new. Using blockchain as the backend technology for digital distributed ledgers, for smart contracts, etc helps improve authenticity of data and enables faster transactions. This can effectively reduce manual load and improve customer experience.
3. Digitized Workforce
Robotic Process Automation (RPA), Artificial Intelligence, and Machine Learning are not buzzwords anymore. They are not experimental technologies. There are solutions developed on these technologies that are available for use today, and financial institutes can leverage them to create a digital workforce to supplement their manual workforce. The simplest example is a chatbot. An NLP enable chatbot (like Freshdesk or Zendesk) is capable of simulating a human conversation and can take over preliminary support tasks from the support team. Automation can streamline insurance setup and claims processing, greatly reducing execution time. AI portfolio management systems are helping financial advisors provide better, more accurate services, faster. In fact, it is projected that by 2030 AI will reduce operating costs of banks by 22%, which can be as much as a saving of $1 trillion.
4. Mobile Wallets (or Applications)
We already highlighted the amount of transactions that happen over digital transactions. Consumers today are looking to execute actions over a mobile phone, because of convenience, speed and easy availability. There were 2.9 billion smartphone users in 2018, and in 2019 this number rose to 3.2 billion! 2020 is predicted to see approximately 3.5 billion mobile phone users. Financial institutes need to invest in creating mobile applications that give their consumers an easy interface to access services and features, because the mobile phone is where their audience is likely to most spend time. if you’re looking for an app development partner, we’ll be able to help: Mobile App Development
5. Collaborate than Compete
Goldman Sachs, earlier in 2019, invested in a German startup founded by Deutsche Bank Elinvar who built a digital platform that helps traditional lenders offer their services online. Visa partnered with fintech company Ingo Money to launch a product for merchants and banks to quickly get onto the payment network’s systems allowing fast digital payments to customers, a solution they claim will eliminate $33 trillion in paper checks. Similar to purchasing automation technologies from technology solutions providers, financial institutes can benefit from partnering with fintech solutions providers to take their services online. In fact, PwC says that approximately 82% of today’s financial institutes will create partnerships over the next 5 years.
Key Takeaway
Technology is advancing at a fast pace, and businesses from across domains are being quick to adopt. Healthcare, Entertainment, Education, Retail, Real Estate, every single sector is going digital, and so is Finance. There are brilliant innovations being released in the finance sector, solutions like online money lending, digital trading, cryptocurrency, etc, and as we said before, companies have only two options: ride the wave, or be washed to shore.