Tag: Digital Transformation in Financial Services

Digital technologies are evolving at an unprecedented rate. Major innovations, such as artificial intelligence tools, machine learning software, cloud computing resources, and big data, have already reshaped the landscape of countless industries and actualized new financial concepts such as blockchain and cryptocurrencies.

As business leaders apply these technologies to their digital transformation initiatives, many focus on functions like sales, customer support, and demand forecasting. While these are mission-critical functions, finance must be front and center during any digital transformation discussion.

Whether your team manages a standalone financial business or is responsible for overseeing an organization’s financial functions, you must embrace the digital world. Let’s take a closer look at the financial technology (FinTech) landscape, identify some ongoing challenges facing the financial industry, and shed light on some tech trends you can adopt to strengthen your competitive advantage.

Read more: Top Ways Business Intelligence In Finance Can empower CFOs Today!

The Financial Business Technology Landscape

FinTech is primarily responsible for the evolution of the financial business landscape, and over the last few years, the FinTech sector has exploded. As of 2023, there are more than 26,000 FinTech startups globally, as well as hundreds of pre-established FinTech developers.

The growth of the FinTech market has largely been supported by venture capital (VC) funding. Though numerous FinTech sectors have received significant financing from VC rounds, three stand above the rest.

Between 2016 and 2021, the following three sectors received over $5 billion in VC funding:

• Capital markets ($8.07B)
• Payments ($6.03B)
• Wealth management ($5.43B)

Digital lending, FinTech tools for small-to-medium-sized businesses, and banking-related projects also received significant funding, though these amounts fell below the $5B mark.

The Top Challenges Facing the Finance Industry

The modern financial business landscape has largely been shaped by uncertainty, market volatility, rapidly shifting consumer trends, and the emergence of increasingly sophisticated technologies.

Businesses in virtually every industry continue to face disruptions and supply chain challenges, hurdles that have placed an additional burden on finance teams, as they are tasked with helping their organizations prepare for the unexpected. Unfortunately, antiquated solutions and strategies don’t provide the agility necessary to promote adequate resilience.

From the financial business perspective, the digital world has led to the development of two new core challenges: accessibility and racing to keep up.

First, consumers expect to be able to access services, accounts, and support on their terms. To meet this demand, financial businesses must develop user-friendly mobile apps that increase the accessibility of their services and work to empower consumers.

The second challenge is interconnected with the first: New technologies are arising so rapidly that some businesses need help to keep pace. Those that struggle fall behind in the digital arms race will cause financial organizations to lose valuable market shares, potentially fading into obscurity.

Read more: Technology in Finance: What to look out for in 2023!

Changing Finance to Thrive in the Digital World

Fortunately, organizations can overcome these challenges by adopting finance technology trends and implementing robust new software solutions.

Organizations committed to reinventing themselves must develop a cohesive digital transformation strategy. As part of the process, business leaders must identify any functions and processes that need to be retired, updated, or improved. From there, they can then begin exploring solutions to enhance the agility and versatility of their business.

Conducting extensive market research is also essential to digital transformation. Financial businesses need to step into the minds of their audience and determine what features, capabilities, and tech services are at the top of their priority lists. Only then can businesses strategically invest in new technologies and solutions that will align with the needs of modern consumers.

Read more: Data Analytics in Financial Services and Banking

Finance Technology Trends that Can Give Your Business an Edge

If your organization is on the precipice of a digital transformation but is still determining where to focus its efforts, examining current FinTech trends is an excellent place to start. A few of the trends in the finance industry include:

1. Self-Service Tools

Most consumers lead hectic lives, which means that many of them don’t want to have to stop in a branch or waste precious time seeking phone-based support. Instead, they’d prefer to have access to user-friendly self-service tools so that they can access support or manage their account whenever is most convenient for them.

Therefore, you should implement customer-facing tools and features that empower your consumers. The easier your services are to access, the better, so make sure that clients can reach these tools via various channels, including desktop and mobile devices.

2. Sophisticated Mobile Apps

The rise of digital-only banking has forever changed customer expectations regarding financing. Digital financial institutions have shown consumers that managing every aspect of an account is possible without ever setting foot in a branch.

While you do not necessarily have to transition to a digital-only business model, you need to provide your consumers with access to a high-quality mobile app that is easy to navigate, simple to use, and reliable.

3. Embedded Finance

The embedded finance technology ecosystem has become too big to ignore. By joining this growing sector, you can create new revenue streams and expand your organization’s reach within the finance industry.

Of the various types of embedded finance solutions, “buy now, pay later” (BNPL) has become especially popular. It is a sales model that allows customers to make purchases immediately but pay for the goods via a set number of more-affordable installments. In 2021, BNPL transactions totaled over $120B, and they are expected to reach a value of $576B by 2026.

Read more: How Embedded Finance will Transform the FinTech Landscape in 2023!

Reinvent Your Finance Business with Fingent!

According to Deloitte, the rapidly-growing FinTech industry will reach a market size of $188 billion by the end of 2024. This statistic illustrates how bank executives and business leaders across the financial industry are embracing digital transformation. In fact, 66.7% of bank executives believe FinTech will “impact wallets and mobile payments globally,” according to Statista researchers.

If your organization wants to keep pace with forward-thinking financial businesses, it must reinvent itself for the digital world. Fingent can help you do that via our financial software development services. We develop highly-secure, purpose-built solutions, such as cash management software, mobile and internet banking apps, digital finance and accounting tools, and other applications that will enable you to thrive in this rapidly evolving industry.

Digital transformation has become indispensable, more so now than ever before. When COVID-19 struck, governments swung into action and issued orders that restricted in-person business operations and encouraged people to work from home. In response, businesses began to look for ways to continue their operations by turning to various technologies.
Even before the spread of the pandemic, these technologies empowered businesses to engage with their customers, allowing workplace flexibility while introducing automation and faster processes. But the pandemic accelerated these adoptions immensely.
The digital transformation helped businesses to find ways for people to communicate, collaborate, and complete work while working remotely. At the same time, it catered to the request of customers who preferred contactless or contact-limited operations as well.
Exploring and understanding the latest digital transformation trends and what parts of these transformations will likely be here to last will help you plan the best digital transformation strategy.
Read more: Prepare for the future of Digital Innovation with these 10 services from Fingent!

What Is Trending In Digital Transformation Now (2022) And What’s Going Cold?

If there is one takeaway all businesses can learn from this pandemic, it is to be adaptable. As the landscape reinvents itself and workplace culture trends shift suddenly, systems, processes, internal dynamics must pivot to stay competitive.
It is crucial to adopt digital trends with the staying power to benefit your business. This makes it important to know all about the trend that will stay long-term versus ones that will go cold in this post-COVID ecosystem. Let’s begin with what goes cold.

1. Fading: Blockchain implementation

Blockchain implementation is designed to maintain distributed ledgers. However, the cost associated with it is higher compared to other technologies that can be applied more affordably. The higher pricing has diminished the interest in blockchain implementation.

2. Fading: Office technologies

Much of everyday business operations hinge on office technologies. Work from home mandates has changed this outdated means of communication and collaboration. Mobile phones have replaced pagers and online documentation has replaced paper.

3. Fading: Complicated and inadequate technology stacks

Whether your team is remote, hybrid, or office-based, it is crucial to have the right tech stack. A 2021 Work Report finding shows that 32% of workers quit a job because of inadequate technology and there is the other 49% who are likely to quit if the tech stack is hard to use.
Employees do not want to waste large amounts of time searching for information across various platforms. This can also result in security breaches too as it puts sensitive data at risk. Opting for streamlined technology over-complicated technology can lead to maximum efficacy.

4. Trending: 5G will go mainstream

Businesses need reliable connectivity and more bandwidth to achieve greater success at their core parts such as remote work and videoconferencing. Increased reliance on phones, tablets, and other IoT devices highlights the need for the multi-lane superhighway and so 5G deployments have become a vital part of the solution.
Read more: Future proof your business with 5G, Edge Computing, and Cloud!

5. Trending: Customer Data Platforms

There has been an explosion of Customer Data Platform (CDP) last year. It is highly difficult to organize fragmented data from multiple sources. Organizing such data is also a costly affair. To address this challenge, most companies now rely on CDPs to help them collect, organize, tag, and make it usable for all those who need access to it.
Data will continue to grow exponentially in the coming years which makes the rise of customer data platforms inevitable.

6. Consolidation of software vendors

Worldwide merger and acquisition activity combined with developing technologies has resulted in a consolidation of software vendors. According to a report by Gartner, consolidation in the tech business is set to hit a record high in 2022.

7. Digital transformation tools

Remote and hybrid work is becoming the rule, not an exception. With this scenario, organizations need technologies that seamlessly enable collaboration. Digital transformation tools will help businesses to manage employees and stakeholders that are globally dispersed. And this trend will become increasingly prominent in 2022.

8. Increased focus on the power of AI and hyper-automation

The gigantic amounts of data that businesses gather are only as effective as their AI systems. So, the implementation of AI will remain crucial for efficient business function in 2022. There is no need to approach AI with fear as AI will repurpose human assets as opposed to taking jobs away.
The key purpose of Artificial Intelligence is to automate. Essentially, this means all mundane and repetitive tasks can be automated resulting in huge benefits for many employees. Besides, it allows the employer to use that talent for more purposeful tasks.

9. AI for enhanced customer experience 

According to Gartner, businesses that use AI in their customer service channels will experience a 25% increase in operational efficiency. The insights on customer behavior are causing IT system redesigns.

10. Technology to support distributed enterprises

The workforce is now becoming more geographically dispersed. Frictionless work experienced necessitates major technical and service changes. Every organization must reconfigure to embrace distributed services. The right digital technology is imperative for business success.

11. Supply chain digitization

Increased consumer prices and the sluggish economy are exerting tremendous pressure on supply chains. Supply chain digitization is a crucial component that will aid in solving supply chain issues.
Read more: A Look Into The Future Of Manufacturing Industry – The challenges, the opportunities, and the technologies that will help revolutionize!

12. Fourth industrial revolution (Industry 4.0)

Industry 4.0 includes new integrated technology that aims to mitigate the inefficiencies of traditional manufacturing. The manufacturing industries are moving towards robotics, AI, and ML to increase efficiency and benefit their customers.

13. Renewed focus on Human Capital Management (HCM) software

The practice of HCM has become increasingly prevalent in 2021. It has become the driving force for most business practices and will continue to center stage in 2022.

Planning The Best Digital Transformation Strategy With Fingent

The acceleration of digital transformation may seem overwhelming. But the right technology can enable a seamless transition for your business. Fingent can help collaborate and streamline the process of selecting solutions that drive digital transformation.
Fingent will assist you in evaluating the available options in the market and in making the best choice on the solutions you need.
We can help in reducing the cost of your tech evaluations, increase process effectiveness and employee satisfaction. So, the only tool you need to digitally transformation of your business is Fingent! Connect with us today!

Technology in Finance: An Overview of the 2025 Landscape

Technology in finance, along with evolving consumer behavior and regulations, are transforming the financial services industry. The COVID-19 pandemic is accelerating the industry’s focus on digital offerings. Government payment schemes, emergency loans, and personal finance management are the need of the hour.

With several bank branches shut and long waiting hours for phone assistance, financial institutions are forced to invest in better IT infrastructure, relevant automation, and technology in finance to deal with the growing consumer demands.

Read more: The impact and significance of digital transformation in financial services. 

A study of financial institutions (FIs) by ISMG and OneSpan in North America revealed that providing customers with a top-notch experience is their main priority. 49% of the respondents feel that legacy and manual ID verification are the biggest obstacles to digital opening for FIs, while 35% found that knowledge-based authentication tools were obstacles to onboarding. 

Some general FinTech statistics worth knowing are:

• By 2022, the global financial sector is expected to be worth USD 26.5 trillion with a CAGR of 6%.
• 49% of banks and 60% of credit unions in the US believe that FinTech partnerships are worth it.
• Digital payment is one of the most significant FinTech products and holds about 25% of the FinTech market.

That said, many banking and financial institutions are adopting the latest technologies such as artificial intelligence, blockchain, etc., into their operations to benefit their customers, stay competitive, and improve business growth.

Read more: FinTech: Safeguarding customer interest in the post-pandemic world 

Here are the top five technologies that transform the financial services industry currently. 

1. Artificial Intelligence

The most crucial advantage of Artificial Intelligence in the finance industry is cost savings, which is anticipated to be worth $447 billion by 2023.

AI systems are a game-changer for the finance industry as they can examine vast amounts of data and find patterns and trends that people may miss, and even predict future trends. AI technology makes it possible to automate processes and manage tasks such as comprehending new rules and regulations or generating personalized financial reports for individuals. For example, IBM’s Watson is capable of understanding complex regulations, including reporting of markets’ requirements in the Financial Instruments Directive and the Home Mortgage Disclosure Act.

Chatbots in banking are helping automate simple tasks such as opening a new account or transferring money between accounts and are proving to be a great money-saving tool.

Many financial institutions such as Bank of America and JP Morgan Chase use AI to streamline customer service. Additionally, AI facilitates mobile banking that allows 24/7 access to customers to conduct banking operations. AI is also helping financial institutions boost security and detect and prevent fraud. 

2. Blockchain

Blockchain is a promising technology that will impact financial systems significantly. Blockchain technology is inspiring to create several P2P (peer to peer) online financing platforms that help monetary interactions happen in a more decentralized way. Blockchain technology can improve existing systems and processes and create cryptocurrencies.

Five typical applications of blockchain include:

• Make cross-border transaction processes faster, more accurate, and less expensive
• Banks can leverage trade finance to create smart contracts between participants, increasing transparency and efficiency
• Clearing and settlement procedures
• Protect against fraud and speed up the verification process with blockchain-enabled IDs
• Credit-reporting

3. RegTech

RegTech is a regulatory technology that uses cloud computing technology through SaaS (software-as-a-service) to help businesses comply with regulations efficiently and lower costs.

The various areas of RegTech intervention are:

• Data management
• Reframing regulations and implementing new governances
• Real-time reporting
• Data- analytics and decision
• Fraud and risk management

Non-compliance with mandatory government rules leads to fines and crisis. So most FIs want to do everything in their power to avoid non-compliance.

The need for RegTech solutions is growing as FIs grapple to stay compliant with new and existing regulations. RegTech solutions will create a layer that companies will rely upon significantly. Its high accuracy, single dashboard, data analytics, alerts, and insights will help companies optimize resources allocated to compliance and achieve better results.

4. Machine learning 

Similar to AI, machine learning helps create a marketing campaign around the consumer. It enables you to understand what kind of services will attract your target market. For example, how people find a financial website, what page they clicked, and what services they need.

Machine learning algorithms and their capability for sentiment analysis will impact trading significantly in the future. It involves using enormous volumes of unstructured data such as photos, video transcriptions, social media posts, presentations, webpages, blogs, articles, and business documents to understand the market sentiment.

Sentiment analysis will transform the future financial markets, and many believe that machine learning will be central to developments.

5. Big Data

According to the IDC Semiannual Big Data and Analytics Spending Guide, currently, banking is one of the top investors in big data and business analytics solutions. Credit card transactions, ATM withdrawals, credit scores, etc., generate massive amounts of data. Deriving actionable insights from this data is crucial to optimize financial processes and make effective business decisions. It will increase the competency of financial institutions in the future. 

Big data can help FIs learn more about customers and make business decisions in real-time. Big data analysis allows FIs to identify market trends and streamline internal processes and reduce risks.

Read more: FinTech Innovation: What Is In Store? 

The Future of FinTech Adoption

82% of traditional financial organizations plan to collaborate with FinTech companies in the next five years as they fear losing out. 88% of established FIs believe that they may lose to standalone FinTech companies in the next five years if they fail to adopt FinTech innovation.

Financial companies will have to work towards providing a seamless digital experience for their consumers. To avoid the risk of losing out in the market, many FinTech startups, incumbent financial institutions, and technology companies are entering into new partnerships. 

Read more: The New Untapped Opportunities for FinTech Companies in the Coming Years 

Technology in finance is no different than other disruptive technologies across various industries. It would be wise for even small businesses to consider FinTech as an investment for the future. Fingent has developed end-to-end disruptive technologies and innovative FinTech solutions that will help your business thrive and stay relevant. Contact us for more details.

The impact and significance of digital transformation in financial services

Changing customer expectations, increasing regulatory complexity, stiff competition, and other factors are constantly pushing businesses for renovation and innovation. Also, the rising number of FinTech companies and solutions over the last few years have completely transformed the financial services landscape. Rather than just technology, digital transformation in financial services has now become an integral part of a successful business strategy. Digital transformation in the financial industry has improved employee and customer experience by helping meet regulatory deadlines and ensure cost-effective operations while remaining highly competitive.

If you consider how banking has transformed over the years, you will understand how digital transformation in banking and financial services has grown to benefit everyone with convenience. From simple branch offices to ATM and mobile apps, digital transformation has offered greater convenience, choice, and experience. Today, customers are gravitating more towards digital experiences and products.

What is the importance of digital transformation in the financial industry?

According to a recent report by Global Economic Prospects, the global economy will contract by over 5% in 2020 due to the COVID-19 pandemic.

However, the crisis has accelerated economic transformation, leading to an increase in the adoption of digital financial services.

Although the digital transformation was a development priority even before the COVID-19 crisis, it has now become indispensable for both short-term as well as long-term sustainable recovery efforts. 

Here are four fundamental shifts that are forcing financial institutions to accelerate the rate of digital adoption.

1. Forced adoption of online and mobile channels

Social distancing and lockdowns are forcing people to stay indoors or go outdoors only to buy essential items. This has forced the rapid adoption of digital technology across the globe.

Deloitte reports that the United States, which has traditionally lagged in digital adoption is experiencing an all-time high in the number of check deposits and mobile logins. Interestingly, the major contributors to this growth are baby boomers and senior citizens who have been typically slower to adopt the digital channels.

For example, Goldman Sachs reported a 25% increase in the number of active users on the bank’s institutional platform. Also, the country has seen a spike in call center interactions as customers seek protection from the financial crisis caused by the pandemic. 

2. Digital and contactless payments

The lockdown has witnessed a race among retailers to set up e-commerce capabilities to capture sales. With consumers shifting to online purchasing, there has been an acceleration towards digital and contact payments. 

While MasterCard reported over 40% growth in contactless payment across the globe, Visa reported a staggering 150% increase in the U.S alone. Hygienic payment modes such as digital wallets, scanning QR codes, click/tap-to-pay, etc. have taken off well to encourage contactless payments during the pandemic.    

Read more: FinTech: Safeguarding customer interest in the post-pandemic world 

3. Virtualization of the workforce and ways of working

Previously, financial institutions hardly imagined their workforce working remotely. But, the COVID-19 pandemic has forced financial services companies to build a remote work model.

Wells Fargo and Bank of America have pushed almost 70% of their employees to work from home and have established contingency locations for those employees who are into trading and operations. Standard Chartered Bank has kept most of its employees working from home, increasing its VPN system capacity to 600% to keep pace.

Bandwidth issues aside, this transition has been largely successful due to digital disruption in financial services. Most financial companies have even committed to making the remote working model permanent. 

4. Evolution of economies and underlying market structure

Even though financial companies have been enjoying stability for years, the COVID-19 pandemic has fuelled margin pressures for companies.

On one hand, insurers are fighting lowered premiums and high claim costs due to the market scenario, while on the other hand, banks are affected by reduced interest rates. Though it is difficult to predict the duration of the economic downturn, it is forcing financial services companies to operate effectively and efficiently to remain competitive in the market. 

Moreover, as the market dynamics continue to evolve, “big tech” is likely to reinforce its foray into financial services leveraging its scale, size, and expanding its role in the consumers’ day-to-day activities. Also, smaller FinTechs could be at risk with their funding models. All these evolutions will have a substantial impact on buying, building, and partnering decisions for many incumbents as well as start-up financial companies.

Top 6 digital transformation trends in the financial industry

1. Mobile banking

The digital banking environment allows customers to transfer funds, deposit checks, and apply for loans easily from their mobile devices. Today customers prefer to do online banking at their convenience instead of visiting the brick-and-mortar banks. More and more customers prefer to use mobile banking as it allows 24/7 access, almost negligible waiting time, and ease of use. Mobile banking has changed the functioning of banking and financial institutions to a great extent and is expected to grow further in the coming years.

2. Blockchain

Blockchain is gaining momentum steadily and will play a crucial role in digital payments, loan processing, escrow facilities, etc. Additionally, Blockchain will be used in RegTech (a new technology that uses information technology to streamline regulatory processes) to avoid unnecessary regulation breaches.

3. Big data

Big data is everything. Financial institutions including banks are using machine learning to process data and drive analytical solutions effectively. Big data helps banks and other financial institutions to serve their customers efficiently by tailoring their services based on the insights gathered. Eventually, this can help financial institutions to bring in more investment and create a great work environment for both employees as well as customers. 

4. Mobile apps

While everything in banking and other financial services is going mobile, there are third-party financial service providers who are competing with the banks. They could be financial managers, unconventional leaders, or financial budgeting mobile apps. Banks will have to consider ways to integrate these third-party services- what information to provide, the companies they want to partner with, and which services they are likely to offer to their customers directly without the need of the middle-man.

5. Automated Wealth Managers

Artificial Intelligence (AI) is disrupting several industries with automation and numerous other possibilities. Wealth bots or automated wealth managers use complex algorithms to calculate the best investment opportunities, best loan providing institutions, best interest rate, etc. Automated wealth managers have made financial planning a breeze and are also helping people achieve their business objectives accurately and with great returns.

6. FinTech (Financial Technology)

FinTech is a modern technology adopted by banks and financial companies to deliver financial services efficiently. It has improved drastically since its ATM and credit card days to the latest digital banks and blockchain technology.

FinTech along with automated technology and machine learning algorithms are revolutionizing the world of finance. Digital technologies such as customer service chatbots, expenditure tracking, and online budgeting tools are some examples of how far financial services have come today. 

How Fingent can help you?

As your digital solutions partner, we will help you navigate industry disruption and equip you for future challenges. We apply our extensive experience and deep industry knowledge in fintech to guide you to see digital transformation through fruition. Here, we ensure to maximize value with minimal disruption to your existing infrastructure to help achieve your goals. Get in touch with us to learn more.