Technological innovation and digitisation are swiftly remoulding the way in which the financial industry is operating.
Innovative applications of digital technology for financial services are being used to reform the interface between financial consumers and service providers and are helping to improve communication with consumers and increase their engagement.
Financial services industry is one of the most traditionalist and conventional sectors of the business world, in most cases financial services institutions are not in a hurry to embrace new technological developments until they have been thoroughly tested out.
The following are the technological innovations that have transformed the financial services industry and are helping Consumers to get better Services.
These are disruptors or fast moving companies focused on a particular innovative technology in investment, banking, mobile payment and insurance.
They are changing many aspects of finance. These include retail and wholesale payments, financial market infrastructures, investment management, insurance, credit provision and capital raising.
Players in the financial services industry have been trying to catch up with startups that use technology to offer services and financial products. This advancement is swiftly changing the financial industry globally.
The deployment of technology by the fin-tech startup enables them to provide solutions that can better solve customers needs in terms of accessibility, convenience, and rationalisation.
Financial service institutions have been forced to either acquire or adopt similar innovative technology with an aim to create a more convenient, flexible, and faster consumer experience.
To compete effectively with these disruptors the financial services institutions have invested heavily in this new technology to better their functioning and processes.
The processes affected include; payments and transactions, customer services, management of accounts, lending, financial advice, and insurance products/services.
The adoption of block-chain by financial services institutions will go on to become an essential technological innovation and operational infrastructure for the financial industry.
Over the past years, cryptocurrencies have been disrupting the financial industry. The most affected is the banking sector.
The block-chain has been reshaping how people do transactions and make payment over the internet.
It has been offering quicker and cheaper alternative ways to complete transactions.
Block-chain provides a solid trading platform with increased simplicity. Its Application in the financial services industry, will enable them to provide better financial transactions and systems.
For better service delivery, Block-chain will create efficient and effective financial services systems such as an easy way to transfer money, reduced transaction cost and saving time.
also, it will play a significant role by bringing about a technological revolution which will change the banking sector for good.
The financial services institutions can leverage on its versatility to provide services unique to the financial sector.
Sharing economy model (decentralised asset ownership)
A decentralised financial system, is a platform model that uses information technology to find efficient matches between providers and users of capital, eliminating intermediary such as banks.
It eliminates or reduces the role of one or more intermediaries that have traditionally been involved in the provision of financial services.
We have experienced the sharing economy in different industries like automobile – taxi and real estate – hotel rooms.
For example in the financial services industry Online peer-to-peer (P2P) lending platforms allow users (e.g. creditors and borrowers) to interact directly without involving an intermediary (e.g. bank or insurance company).
and decentralise their risk-taking and decision making, yet avoid the sort of search costs that might otherwise be incurred in the absence of a centralised intermediary (e.g. bank or insurance company).
As a consequence, lending activities may migrate away from financial intermediaries.
As with other online offerings of securities, tokenization can allow companies to issue Securities that could be traded with a broad investor base without the involvement of a traditional financial intermediary.
This could shorten and increase the transparency of custody chains that are typically involved in traditional securities holdings.
Omni channel (digital becomes mainstream)
As digital channels continue to influence the way consumers connect with financial institutions, the financial institutions have greatly shifted on how they interact with customers.
They have gradually moved away from traditional procedures and branch based ventures to operating almost entirely in digital ways.
Omni channel has transformed the way financial institutions develop and deliver their products and services. For instance, face-to-face interaction has given way to online distribution for most standardised products.
Wide-scale adoption of digital has the potential of reducing cost of acquisition and cost of servicing, for example, products and services can now be developed, contracted, and delivered remotely.
By use of technology, financial services providers have changed the way they communicate with their customers. They are changing the way financial products are promoted.
Online advertisements are generally targeted to the specific consumers, which is deduced from their online behavior and browsing habits.
As more and more consumers spend most of their time on the internet through their mobile phones, financial institutions are creating powerful digital experiences that are intuitive and secure for their customers.
Due to shifting in customers behaviors, financial institutions are becoming smarter with a focus to migrate transactions and sales to digital channels that help to create a mixed increase user experience.
Customers can get consistent and seamless interactions online no matter what device they use
Robotics & Artificial Intelligence
Artificial Intelligence is often used in reference to machine learning, whereby machines are trained with historical data to recognize patterns and classify new data.
With the use of AI-based systems, financial institutions are able to profile their customers, analyze their behaviors, and give them financial advice, service or products according to their taste and preferences.
Financial services institutions are collaborating with technology companies, to mitigate risk, reduce cost and address key pressure points affecting their customers by incorporating robotics and AI in their operations.
They are looking far beyond replacing the bank tellers.
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