Digital transformation has changed the overall experience for people in the fintech industry. Nowadays, people are moving more toward digital products and experiences because digital transformation has provided choices, experiences, and convenience. It is continuously reshaping payments, lending, insurance, and wealth management for fintech players as well as customers. When it comes to technology, according to MarketsandMarkets, IoT in banking and financial services can expect market growth to $2.03 billion by 2023.
Why Are Financial Institutions Adopting Digitization?
New Age customer needs: Due to covid norms, people have adapted digital modes to manage their finances all across the globe. Digital transformation allows financial institutions to understand the demand of a new age customer and strengthen customer engagement with personalized offerings.
Boost in Digital Payments through e-commerce sites: Customers love fast, practical, and straightforward payment methods. Mastercard has witnessed a 40% increment in digital payments across the globe. Since many e-commerce customers are shifting to digital modes of payments, companies should boost contactless payments through any means be it scanning QR codes, digital wallets, etc.
Improve Productivity: In financial services, there are many labor-intensive tasks such as credit scoring, risk analysis, fraud prevention, etc. These tasks can come in handy with the help of technology. Financial institutes can take a data-driven approach to automate their operations, thus improving productivity and efficiency.
The top 5 trends of digital finance transformation
The use of these technologies in finance and the benefits they offer are the real reason why digital transformation is important in finance:
Blockchain Technology: Blockchain helps in quicker operations, real-time contracts, digital payments, escrow facilities, loan processing, and reducing expenses of managing a database. To streamline processes and remove unnecessary regulatory glitches in finance, blockchain will be used as RegTech.
Cloud Adoption: Cloud adoption to improve security and resilience in financial services. It can bring a huge reduction in IT costs and operations. It allows IT managers to involve in more innovative ways to generate value and revenue.
Use Of AI: Artificial intelligence has boosted automation in the financial sector also in the form of automated wealth managers and wealth bots. These can be used to calculate the best loan opportunities, best interest rates, best investment opportunities, etc.
Robotic Process Automation: This helps in streamlining banking processes. RPA can focus on streamlining business processes that are usually carried out by bank staff. According to Gartner, 80% of finance leaders have implemented or have plans to implement RPA.
Big Data: Big data support banks and financial organizations to modify their services according to customer insights. This is possible through big data. Using machine learning more data can be processed and analyzed to tailor services.
Advantages of digital transformation in the financial sector
Smooth Operations: Employees, managers, and operators have a role to perform in a company but tedious and time-consuming ones can be easily handled with automation and digitization. Thus, it decreases the cost of many external and internal processes and operates business smoothly with reduced errors.
Data-Driven Decisions: Data collection offers competitive differentiation through data-driven decisions made by the organization. You can enhance data collection for your company by transforming your social media, website, and external operations to capture as much data as possible from the target demographic.
Better Analysis: Data analysis and its tools make assessment easier for your decision-making process. Using data analytics, advanced algorithms, AI, and other software, digital transformation will enhance your data and business analysis.
Reduce Expenses: Adopting digital transformation for your business will remove the need for manual working for a few necessities and thus, reduce costs. Digitization benefits you by streamlining the process, boosting speed, and automation thus reducing financial business expenses.
Empower Innovation: Companies can leverage innovation in technology to improve their business processes which can be achieved through digital transformation. Innovation in the finance sector boosts brand stature, brings new customer acquisition, and increments customer loyalty.
Conclusion
There are many benefits of digital finance transformation but it can be achieved only when the process is approached properly. The future depends on the collaboration between skilled teams and relevant technologies. So, to reap its benefits, financial organizations must set a scope for both and then proceed to digital transformation because there is no future without digitization.
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