Reasons Why Financial Services Need To Accelerate Digital in 2021 And How To Go About It
“Go Digital or Go Dark”
Companies in the financial sector run a great risk today — the risk of disappearing entirely in an ever-evolving technological landscape.
Consumers desire convenience. If the user base of your financial services finds a more convenient outlet, they will migrate to it. After all, let’s say you could invest in equities from home. Would you step out?
A digital transformation in the financial sector was supposed to happen in a span of several years. But because 2020 was a thing, it had to happen in a matter of weeks. This left the financial services industry in a state of rapid transition. Those who couldn’t adapt, would go dark.
But Financial Services holds a much bigger stake in all of these than we realize. It is because every business has ultimate payments to be made. And if your financial services do not accelerate digitally in 2021, they will be replaced.
Digital transformation is no longer a technological exhibit. It is a necessity for a good business strategy. In this article, we take a look at the reasons why your financial services need to be digitalised. We also look at how this transition can be eased and provide you with resources to do the same.
Reasons Why Financial Services Need To Accelerate Digital
1. Customer expectations
Customers’ desires have evolved to expect on-demand services. If we are to even exist as a recognized service in the financial sector, going digital is a need.
It is not so much about being the best service available (although we will discuss how we can do that soon). It is more so about just being available.
Smoothening financial transactions for your customers once is not enough. They will forget about your presence in the sector if they don’t see your services are not an option to them in the future.
You can’t compete if you don’t show up, can you?
2. Increasing Regulatory Complexities
Regulation of the financial services industry is undergoing dramatic changes.
What started as a response to the global financial crises, bank failures, government bailouts, and investor losses, have now increased compliance spending at banks by over 60%.
The primary goals behind these changes are to promote financial stability by increasing financial transparency and de-risking financial systems, strict capital requirements and restrictions on certain business activities, increased consumer protection and prevent market abuses.
These complexities demand that financial services accelerate digitally and monitor risks more efficiently.
3. Cyber Security and Data Privacy
The great digital transformation opens doors for privacy breaches and puts conglomerates in a position where they may exploit their customers. Only recently did Facebook CEO, Mark Zuckerberg face trial for allegedly setting up a scheme to exploit private data and earn profits.
The case with the financial sector isn’t very different, either.
But thankfully, governments all over are starting to implement initiatives to ensure consumers’ protection.
Open Banking in Australia is such an example. It gives customers the liberty of choosing which among the approved third parties get to access their banking/financial data. It also lets users choose how their data is used under the open banking framework.
Financial service providers like banks are more accountable in the digital space and are witnessing a revolution in terms of data privacy and cyber security.
Tips For Undergoing Digital Transformation
Getting Started With Digital Transformation
Listed below are a few trends to get you started in the digital transformation journey of your financial services:
● Mobile Banking:
Mobile banking has changed the functioning of banks and financial institutions. It is expected to grow further and is an excellent service to offer in 2021.
● Blockchain:
This is the advancement that we will be talking about in years to come. Not many companies have adapted to Blockchain but it is gaining momentum. Blockchain is expected to play a crucial role in digital payments, loan processing, etc.
● Big Data:
Big data can be utilised to serve customers by curating services based on the insights gathered. Financial firms use machine learning and advanced analytics to process data and generate insights.
● Automated Wealth Managers:
These are essentially wealth bots. This AI uses complex algorithms to calculate ideal investments, loans, interest rates, etc.
● FinTech:
Financial Technology has been present longer than we realize. ATM and credit cards too fall under this. However, it looks like customer service chatbots, expenditure trackers and online budgeting tools now.
Improving Customer Experience
Customer Experience decides how well the financial service is received. The consumers’ retention rates, comfortability in usage, user-friendliness of the UI/UX, the colour palettes, everything comes down to customer experience.
Customer Experience in our industry boils down to two things: Accessibility and User-Friendliness.
Ask yourself these questions:
● “Is my financial service easy to find?”
● “Is it an option for people making transactions in popular marketplaces?”
● “Are the features of my service easy to navigate through?”
● “Is the interface easy to look at?”
The answers to these will determine whether or not your financial services are meeting the standards for customer experience.
Investing In Technology
Financial institutes are taking several steps to improve regulatory compliance and control the increasing costs, associated with advanced analytics, AI, and surveillance.
These steps include investing in:
- Centralising compliance management
- Improving coordination between compliance, risk management finance and IT
- Developing standardised data platforms for regulatory risk and finance reporting
- Employing dashboards and alerts to predict analytics
- Machine learning to aid financial services
- Improving regulatory archiving and e-discovery systems
- Leveraging surveillance tools
In Conclusion
To imagine a financial landscape without it going digital is a far cry. The stiff competition in this arena barely leaves emerging services with a choice. Newer FinTech companies are sprouting faster than ever, regulatory complexity is at an all-time high, and businesses are constantly being pushed to renovate and innovate digitally.
Despite its share of challenges, digitally accelerating your financial service is the best thing you can do for your business strategy.
