The Financial Services Industry

Technology is dramatically reshaping banks, insurance businesses and other financial institutions.

Digital disruption has been impacting the industry in significant ways over the recent past and will continue to do so over the foreseeable future. From personal finance to commercial banks, digital advancement and disruption have significantly altered the way financial institutions have operated in the past. Financial technology or FinTech as it is popularly known, is rapidly transforming the sector. However challenging this may be, it opens new doors to new opportunities.

Banks and other major financial institutions are seeking to exploit the opportunities presented by advances in digital technologies, either by leveraging the technologies in-house or by partnering with FinTech companies.

Initially, FinTech companies were seen as competitors taking advantage of the void that was created by the industry's inability to keep up with technological breakthroughs.

WorkforceAI helps financial institutions resource agile projects to take advantage of new technologies and opportunities that constantly evolve in the financial sector.

Current Trends

Change is the only constant driving the industry trends. The impact of the COVID-19 pandemic has accelerated the rate at which the financial industry is adapting.

Collaboration : A driving need to engage with FinTechs and the increasing role of emerging technologies like artificial intelligence and robotics in the industry.

Pervasive Forces : From banking and capital markets to insurance, investment management, commercial real estate, financial services, all of them face dramatic upheavals forcing them to change the way the industry operates.

Tech-savvy Consumers : The influence of tech-savvy consumers and shifting attitudes of regulators toward new tech, are all impacting the financial services industry in significant ways.

Personalization : The drive for the most useful products and hyper-personalization will continue to define the customer journey. Auto insurance and some insurance products are primary examples of more effective personalization drives.

Regulations : As new regulatory requirements and data protection laws put additional strains on already-stretched resources, emerging technologies such as AI, robotics and blockchain are helping banks address these constraints more efficiently. Clean energy, and equity in financial services are broad themes expected to characterize the Consumer Finance Protection Bureau’s regulatory agenda moving forward.

Challenges

A brief outline of the challenges that financial institutions face today are summarized below.

FinTech : Companies, prompted by the industry's inability to keep pace with technological breakthroughs, were seen as competitors . Today, mainstream financial institutions are adopting these technologies, either by bringing them in-house or partnering with FinTechs.

Climate Change : Insurers have to prepare for the potential impact of climate risk factors and incorporate climate mitigation as part of their enterprise-wide corporate strategies, risk management, and investment portfolios.

Big Tech Companies : Big tech companies, like Apple and Amazon, are well-positioned to grab a significant portion of the financial services revenue from incumbent banks and insurance companies.

Apple’s launch of the Apple Card could open doors to additional financial tools such as debit cards or PFM applications. And Amazon Pay in-store–which could attract merchants by saving them interchange costs, cutting into a $90 billion annual source of revenue for issuers and networks.

Blockchain and Crypto Currencies : Technologies such as blockchain are already heralding a quiet revolution. Blockchain is shaking up the very foundations of traditional business models with peer-to-peer lending, smart contracts and digital payments, eliminating intermediaries and speeding up underlying processes. Blockchain is expected to save significant annual operating costs, prompting banks to deploy the technology in commercial transactions.

The industry appears headed toward a rebirth as we move into a cashless society. Crypto currencies such as Bitcoin, Ethereum and Ripple are making inroads to the market.

Digital Transformation

Technology is the most disruptive force driving change in the financial services industry.

Confronted by COVID-19, banks and other financial institutions rallied to the challenges. With the initial success achieved in a short time, they realized that innovation when done right, could be a game changer. Their aim  is to continue driving forward with digital transformation. But that requires a cultural transformation that is the main deterrent engrained in their corporate culture.

The banking and financial services industry have been turning its focus toward innovation, driven primarily by technology. Digital strategy is now embedded in their core strategy.

Looking Forward

Across sectors, financial organizations could overcome challenges and ascend to new heights by prioritizing digital transformation in their business strategy.

Financial institutions are now thinking strategically about their technical setup and questioning whether the tools that they have previously relied on are the right ones to use going forward.

Banks and financial institutions should re-define themselves as agile technology companies as customer preferences, demographics and lifestyles change.

Building this level of personalization for customers requires a technology infrastructure that enables real-time insights from vast amounts of streaming data from a variety of data sources. Data and analytics, powered by AI, will enable personalized, contextualized interactions across the entire insurance life cycle, from sales and underwriting, to claims management and support.

In the new world, financial architectures will decouple financial activities from physical facilities through the use of technologies like zero-trust networks that enable location-independent secure access. Operational resilience plans will be updated to include globally and regionally resilient infrastructures like cloud.

Trend to Digital : The trend towards contactless finances is growing. Both traditional players and FinTech firms have introduced new finance apps or upgraded existing ones to offer new services and programs to match consumer needs. The growth of customers who relied on mobile apps is expected to grow from 55% seen in 2021.

Future driven : Financial institutions across the world are deploying the latest technologies as a prelude to a future that is increasingly driven by technological change — a future characterized by instant payments, anytime-anywhere services, individualized products, virtual currencies, and perhaps run by increasingly 'invisible banks'.

WorkforceAI

WorkforceAI meets the challenge by facilitating the creation and management of multiple teams working collaboratively and remotely.

Our process can lower costs and reduce time-to-market while retaining production quality, even in large projects delivering fully operational financial services systems.

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