Digital Transformation in Financial Services
Table of Content
- Top Financial Services Digital Transformation Trends
Digital transformation is the biggest innovation in the market. It is everywhere. You cannot enter a client meeting or a boardroom, without seeing the impact of technologies or hearing about the new ideas for digital disruption. Though transforming a legacy system into a digital business is challenging, it comes with many benefits. And this is why various industries are trying to adopt this concept. And the financial industry is at the top of this list. Financial services companies are planning, adopting, and training their employees to adapt to this new change.
And like almost every other financial company is doing this, the competition is very high. Therefore, organizations have to be quick in their digital transformation. Also, they have to be aware of all the financial services digital transformation trends. For that, here, we have listed some amazing trends for you to catch up and learn more about this concept.
Digital Transformation in Banking and Finance
Let’s be more specific about the importance of digital transformation in financial services. Digital transformation changes the existing infrastructure of the business and enhances the value of the customer. It enables the customers to carry out all the banking-related activities from anywhere at any time. Besides, taking the business to digital enables agility, removes outdated processes, and heightens efficiency.
In addition to this, digital transformation journeys of financial institutions enable having smoother inter-team processes. And this can eventually help in creating more efficient service for clients. It also helps in automating the manual processes that the traditional banks follow and this enables the financial experts to focus on the actual task. Besides, digital disruption in the finance world also helps in having a quicker problem-solving approach and greater ROI.
Digital Transformation is a Top Business Imperative
Digital transformation is something that has become essential for businesses for all industries and it also includes financial services. Almost every company in the financial industry is turning towards digital transformation. The financial institutions are either on their way to creating a digital strategy or are implementing one. And the main reason behind everyone joining the digital transformation journey is the rapid change in the landscape of financial services.
This has also increased the competition within the financial sector. There are thousands of new players in the world of finances. All of them are offering different types of services by adopting the latest technologies. And this is why financial services firms have a lot to catch up on in comparison to other businesses.
The Decline of In-branch Banking
As per a survey, almost 25% of the bank branches in the UK have been closed since the year 2012 and the number keeps dropping. Recently, even some areas across Europe have experienced a decline in in-branch banking due to COVID-19.
The main reason behind decreasing the number of bank branches is that people now prefer digital solutions more. And COVID-19 has made it clear that using banking facilities from their homes is more comfortable for the users than visiting a physical bank. Therefore, every financial services workforce has started transforming their banking services to mobile devices. Besides, technology solutions offer quick and effective services that indicate power and agility.
Improving Customer Experience
Customer experience is a very important thing when a financial firm is trying to gain a response to its digital transformation efforts. Client experience means the response to the customer’s overall journey of the digital business from start to finish and this includes every interaction a user has with the digital system. Having a good client experience means that the customers are happy with the digital transformation strategy of the financial institutions.
A good review from the client includes things like them being able to access their bank accounts from different digital channels, receiving real-time notifications through the automated system, getting quick support from the chatbot, and more. Besides this, users also crave personalized financial services solutions. And this is what digital solutions partners prefer to offer.
Besides, customers like to manage their finances from one place, and for this, there is nothing better than real-time engagement. Clients value digital tools that offer efficiency, simplicity, and transparency. And anything less than that is not tolerated by the users. So, to offer all these things and stay ahead of the competition in the financial world, organizations hire financial software development companies that utilize the latest digital technologies in creating unique solutions to grab the users’ attention.
This proves that digital transformation completely helps in improving the financial services for the clients. In addition to this, a significant amount of customer experience helps in introducing new cloud-based services and products in the market.
Digital and Contactless Payments
Digital payments have always been a part of the young generation’s lifestyle. But after COVID-19, people from all generations have started taking advantage of this approach. And after observing the acceptance in the usage of contactless and digital payments, more and more businesses have started this type of digital transformation in financial services. Now, customers can make payments for anything they buy or any service they use through digital payment applications or internet banking facilities.
IoT, AI & Blockchain Investments Heat Up
Almost every other financial services executive says that if the organizations invest in innovative digital capabilities, it can fulfill customer expectations and take the firm to a greater height. Some of these digital capabilities include Artificial Intelligence (AI), the Internet of Things (IoT), and Blockchain.
AI – The use of AI in the financial industry has helped it in many different ways. For instance, identifying transaction anomalies has become easier with AI and now one can perfectly mitigate money laundering and fraud risk. In addition to this, the applications that are created to work on the trading market can now make smarter and faster trade decisions as per the analysis of past performance. AI also enables the development team to carry out client mood and sentiment analysis. It also helps in offering personalized customer experiences after studying the client’s portfolio.
IoT – The Internet of Things (IoT) is a technology that has played a big role to navigate industry disruption. It has brought a great impact on financial services institutions. IoT enables financial applications to gather real-time data about customer assets and then improve their services. In this way, the Internet of Things helps in creating a personalized environment for the clients.
Blockchain – Another technology that has changed the financial services industry is Blockchain. Though it is an early-stage adoption, many financial services companies have started using this technology. Blockchain technology offers financial institutions and their customers a more secured system and automatic payment platform with the help of smart contracts. Besides this, it also helps in strengthening the trading system and claim processing systems.
Evolution of Economies and Underlying Market Structure
Though fintech has been a powerful and stable technological approach, the emergence of COVID-19 has fuelled some pressure upon financial institutions. These days, insurers are approaching companies to lower the premium rates and on the other hand, the claim costs have gone to another level. And scenarios like this make it very difficult to predict the economics.
But with the help of new cloud-based services, digital technologies, and digital transformation ideas, software development companies are helping financial institutions to go completely digital and operate efficiently & effectively. With the evolution in the digital era, financial companies are now leveraging their size and scale to expand their role in the client’s daily life. This type of change surely indicates that economics is evolving.
Digital transformation has become a huge thing in every industry. But the field has observed an immense change in the banking and finance industry. To keep up with this new technological trend, many financial companies have started embracing the digital age and have changed their legacy system to a digital business. They are still following their traditional financial architecture but with a digital touch to it. And this helps finance companies to stand out from the crowd and grab customers’ attention.