Digital transformation helps financial organizations to bridge the gap between conventional and radical banking systems. This enables organizations to improve customer experience, operational efficiency, and data security.
The digital approach can be applied to modes of payment, retail banking, insurance, finance management, and commercial banking. Here are the top technology trends that influence the financial industry now and in the future.
Linked Architecture
The Internet of Things (IoT) is an interlinked network of devices that allows businesses to automate essential business processes, communicate with each other and share information. It can handle financial requests, transfer ownership of a specific asset, and even carry out different approaches remotely. Financial institutes with connected architecture can simplify balance control and accessibility. It enables them to collect and analyze customer data, utilizing the insights to procure customer needs and requirements. At the same time, IoT offers efficient security, better energy efficiency, and solid profitability.
Big Data Analytics
As per a recent report by Fortune Business Insights, the global big data analytics market is projected to grow to USD 655.53 billion by 2029 at a CAGR of 13.4%. Many financial institutions need to invest in big data platforms to help compute and store data to establish convenient, personalized, and secure transactions. Big data in finance helps drive revenue opportunities by analyzing customers’ spending patterns, credit information, financial situation, and social media activities. It helps financial firms to deliver personalized recommendations to customers creating a more efficient process to drive competitive advantage, provide strengthened security and deliver better customer service.
Biometric Technology
While global customers rely less on cash, mobile payments and remote banking are on top of the curve. In light of digital banking, it is challenging for businesses to provide a frictionless customer experience maintaining robust security. Biometric technology offers a promising alternative to traditional PIN and password processes.
Features like a fingerprint, face recognition, voice recognition, and other biological characteristics will allow banks to verify customers’ identities before processing transactions.
This technology will help banks provide a secure, fast, and efficient method of transactions now and in the future.
Blockchain Technology
Blockchain establishes a ledger of transactions by utilizing complex algorithms and encryptions that are tamper-proof and readily accessible to everyone in the system. A speckle of these transactions is recorded by each data block chained together and locked away with advanced cryptography. The key efficiency of Blockchain technology is cross-border settlements. It creates a global network that is highly cost-efficient and robustly transparent. It helps the financial industries in automating claim sorting and processing, helping financial firms to streamline KYC processes, efficient transfer of payments, and asset management.
Management of Security Risks
Cybersecurity remains a critical factor for banks and financial institutes as they deal in billions of digital transactions. Very few financial institutes rely on traditional security models that can be easily breached. Cyber resiliency needs to be sharp, effective, and thorough for financial institutions to locate vulnerabilities. At the same time, the financial service industry needs more qualified anti-fraud systems to safeguard against internal threats and third-party risks. Incorporating key codes, voice ID, two-factor authentication, one-time passcodes, behavioral analysis, digital fingerprinting, and protective messaging can be established to reach the highest level of security.
Also Read: Five Big Customer Experience (CX) Transformations in Fintech in 2023
Automation of Back-office Functions
Rising operating costs lead to slow bank processes, poor compliance management, and an unsatisfactory customer experience. Robotic Process Automation (RPA) enables banks and financial companies to save time and costs by automating all the manual processes like customer onboarding, verification, risk assessments, and security checks that require a considerable workforce to execute the tasks. Additionally, it mitigates errors allowing companies to maximize operational efficiency, enhance accuracy, and stay relevant and competitive. RPA systems can observe and learn the workflows that increase productivity within the workplace and establish financial institutions closer to the new age of FinTech services.
Technologies have a huge impact on the financial services sector. It modified traditional banking rules unfolding a new future for the finance industry. The extent to which the financial industries leverage the technologies will determine their ability to tackle challenges and compete in a high-scale market.
