How Digital Technologies Transforming the Financial Sector?
In the end, for better or worse the pandemic has led to a “new standard” for communities, individuals as well as companies. In spite of all the challenges, an industry-wide digital transformation has been able to emerge as the best portion of our post-Covid society. Many have experienced digital transformations such as work-from-home and telemedicine, remote education and so on. The impact that Digital Financial Services across these transformations is undisputed. A recent report released by World Economic Forum says that
In a nutshell, the statistics and experts are expecting rapid steady growth of digital consumers and digital companies. All this digitization will be designed built & tested for ease of Netbanking & Fintech. We can confidently conclude that there will be a huge growth of Digital Transformation in Financial Services by 2021.
The digital transformation process can be a challenge. While some businesses are already digitally transformed in their DNA. However, the vast majority will require a lot of foresight and planning. They’ll need to let go of traditional practices, change their cultural standards, improve their employee’s skills and change their ways of thinking in order to become a digital-first business. Connecting the dots among digital strategies, strategic initiatives and business enablement will be crucial.
Financial services firms in the middle market particularly, face a unique problem: They must master the complexities of the process without the powerful resources that their more competitors and the same degree of agility and flexibility as smaller companies. They must begin their process today or risk being overtaken by their competitors or losing relevance to their industry
The benefits of Digital Transformation for Financial businesses:
54 percent of CEOs believe that technology has been essential in boosting the profits of their business. While technology-agnostic business attempts to the catch-up game, experts have identified four distinct benefits of digital technology, which include:
- More value to customers with Greater Margins in Business: According to McKinsey digital technology aid banks in improving acceptance rates for loan applications, at the cost of just 60 percent. In contrast, customers were able to apply for loans in a matter of minutes and receive the loan in 24 hours. In addition, many companies have reduced costs by switching from selling to e-commerce. Numerous reports claim that digitization has helped businesses become more efficient, compliant and secure in finance and accounting and managing risk.
- Competitive Benefits that come from Seamless & Swift customization Participants at the EY Financial Leadership Summit observed that the maturation of a company’s technological capabilities is going to play a crucial part in separating financial institutions from their competition, i.e. technology will give them a competitive advantage in the field of financial services. For instance, higher margins have enabled companies to be more flexible and able to achieve an advantage in cost. However, human-centred designs have enhanced the ability of businesses to organize, separate and tailor offerings to the needs of their customers.
- Customer-centric experience with lower risk of errors: Technology has given customers more ability to influence and alter the experience of all consumers. Digital technology has elevated interactions to be more intuitive which makes business services more personalised for customers and less susceptible to mistakes particularly communication errors.
- Data-rich decisions for credibility and flexibility: Even after protecting the privacy of all stakeholders digital technology can gather the most current information on every aspect of the business. Companies with weak financials are able to demonstrate operating profits based on evidence to boost their credibility in the market. On the other hand analytical tools can help companies to adjust to changes in consumer habits.
In the end, the advantages that digital technology can bring are revolutionary that companies no longer doubt its use. Instead, they look at the most effective strategies to be part of the current market trends or even set them as their own.
Digital Technology Changes within the Finance Sector:
In addition to chatbots, budgeting applications and platforms for trading, Financial are not just expanded into a myriad of businesses however, it has become a major feature in a lot of these. The most significant trends include:
The digital revolution has also transformed markets. The current standard of digital transactions is typically caused by a disruption that happened in the last few months or years ago. Digital transactions, for instance, do not require mobile wallets or plastic cards. Contactless payment options that are new have disrupted the market including NFC-based IoT transactions, to cryptocurrencies and pseudo-currencies.
The increase in collaboration:
The majority of Fintechs collaborate across all business sectors. While some are working with major retail and banking companies while others are aggregating small businesses to improve users’ satisfaction with their services. Furthermore, payment Fintechs collaborate with lending fintech, cryptocurrency as well as social networks. This is the reason Fintech is sometimes referred to as an Ecosystem.
Fujitsu in its survey of multiple industries, including Financial and Financial, found the fact that 89% of the companies that took part in the survey had the mindset of agility following digitization. This increases their ability to continue their business in times of economic turmoil and especially during commercial transactions. For instance, Fintech helped businesses adapt to contactless payment during covid-19’s lockdowns.
Dashboards for businesses today enable users to easily access the user-friendly designs of information about compliance, performance and customer relations. Because of digitization, companies have a wealth of data available to them. This allows them to assess risks and manage them in real-time.
An article in the Forbes article forecasts rapid digitalization in the banking industry. It cites the fact that Bain’s Global survey projects that 95% of customers will make use of digital banking in the post-pandemic period. Accenture’s prediction states that in two years time seven trillion dollars of transactions USD will shift between cash and digital. It’s no wonder that digital banking is an industry leader.
Fintech has surpassed ATMs and plastic cash. Today, it is everywhere. Indeed, a popular issue among experts from the industry is believed to be “Digital Transformation Fintech 2021”. KPMG estimated the investment in fintech globally with 105.3 billion dollars, comprising several unicorns in fintech. The firm also expressed optimism about continuing growth in B2B transactions, which includes Blockchain, Insurtech, Wealthtech and Regtech.
The majority of internet users are aware of cryptocurrency, but most people don’t know that it’s blockchain technology. In its most recent Global Blockchain Survey, Deloitte reports the fact that 55% of executives consider Blockchain among their top five top priorities for the business, and 88% of them expect it to become a mainstream technology. It’s no wonder that companies like Tesla accepted Bitcoin payments. Blockchain is also growing in popularity in the field of tokenized securities.
Machine Learning & Artificial Intelligence:
Machine learning is a natural aspect of Artificial Intelligence. In 2025 AI’s Global Fintech Market may be worth the amount of USD 22.6 billion. The majority of Financial firms that employ 5,000 or more have already embraced AI. The deployment of AI isn’t as difficult as many people think in particular when 86 percent of Financial executives are planning for investment in AI-related technologies.
Improvement in Business:
Digital transformation is an immense improvement to current methods of business, customer relations as well as products. Experts and influential people prefer to refer to it as future-proofing. There are those who argue that those who claim to be future-proof were destroyed by Covid-19, however, they can’t doubt the resilience of digitally-equipped companies during the deadly. Nowadays, nearly every industry will be digitalized and all plans are heavily dependent on Fintech and their digital Financial counterparts particularly those that can adapt to rapidly changing markets.