Can you name me three areas whose nuances we are often asked not to talk about much? Sex, politics and money. I mean, of course, each one of these rules our lives in some way or the other. Though I am not going to comment on the first two I would definitely talk about money, more importantly finances in the following post.
The financial services ecosystem today seems to be changing dynamically – all thanks to the emerging disruptive technologies such as big data, machine learning, artificial intelligence, mobile technology, etc. In fact, it has been observed that businesses have already begun retrospecting about their technical setup whether the tools and tech they used to previously rely on are the right ones to use going forward or not?
Fret not, by the end of this post, I am pretty sure you will be able to figure out a way to clear the unwanted winds of change. Not to mention that there are tons of financial software development companies carrying hands-on experience in automating business procedures for banks, insurance and other fintech companies.
So the big question is, what’s driving the financial services industry conversations and roadmaps? Before we proceed further, let us step back and understand the history of the financial world.
I am sure you must be well-versed with the fact that we have already covered three great revolutions and are currently living through the fourth revolution of mankind. Now each revolution creates some enhancement in regards to monetary and value exchange. Maybe that’s the reason why we need to understand what was the scenario of financial services or financial software development services to be precise before.
Banking and financial institutions have been established for ages. Perhaps even before the first currencies came into existence. With the time passing by, coins became a bit outdated and functional systems/ financial services became needed to collect taxes and distribute wealth.
Initially, banking and financial organizations were created to pay for foreign goods and services just to get rid of the barter system. And coins were the only option. In fact, several research papers have revealed that coins could be hoarded more easily than other commodities.
Cutting the long story short, the advent of the digitization of financial services and fintech organizations is not just a fad passing by. It’s here to stay. Absorbing breakthroughs is no big deal for industries especially with the dawn of fintech technology. Although banks have been able to integrate Internet banking, followed by SWIFT or TARGET2-Securities, now it’s time to consider big data, machine learning and artificial intelligence.
There is no denying the fact that the financial sector is going through a major paradigm shift. Artificial Intelligence, Machine Learning, Big data analytics, the Internet of Things, blockchain, all have led to ever-changing dynamics especially in regards to customer expectations and preferences. At the same time, businesses are expected to keep up with the changing enormous task just to remain competitive.
Fintech shortened from financial technology is a hot potato across the globe. No matter how people consider the concept as the new kid in town. Fintech was introduced back in the 1950s -do you remember the era of credit cards? And in the 1990s came internet banking? Well, I guess the millennium phase of contactless payment technology has begun since then.
Innovation thus far has been largely driven on the front-end within these specialized offerings, mainly through improving customer-facing facets of financial services. Let us revise how things are being conducted in the fintech industry and the banking sector so far.
#1 Services have been enhanced to a great extent – Unlike traditional banking systems, fintech technology does not tie its customers with switching costs. Moreover, the fintech industry has the power to change customer behaviour with better and more personalized services and referral-based client acquisition.
#2 Branding like never before – Modern marketing tools are quite being hyped about recently. Plus these tools and technologies such as big data, cloud computing, machine learning are the ones that have the potential to make financial transactions more exciting and palatable to consumers.
#3 Cost-effective is now an option – Another crucial reason to promote fintech firms is that they are capable enough to attract different customer segmentation at affordable prices. Virtual operation is one of the core reasons here.
In today’s digital era, customers are no longer looking for those tried and tested traditional financial services industry. Instead, they prefer services that deliver a personal connection and are quick and safe, it doesn’t matter if that requires considering other options. This is the reason why FinTech and financial software development companies are found gaining momentum day in day out. You see there are around 1.7 billion people worldwide without any bank accounts. And for them, financial software development services providers come as their knight shining armour.
Technology is dominating the world- no two ways about it! It is assumed that after 2020, Technology-led innovation will be the new norm for businesses. And whether they like it or not, they will be compelled to leverage FinTech (Financial Technologies) to build new and exciting models. According to a report, it was valued at $127.66 billion in 2018 and is expected to reach $309.98 billion by 2022. Another report says that the FinTech adoption rate worldwide grew by approximately 64% in the year 2019.
Without any further ado let us talk about the top three technology trends having enough potential to benefit their customers, remain competitive and improve business results.
One of the most popular financial services technology trends which are often considered by non-traditional financial institutions is Blockchain. The tool simply records financial transactions in a large, distributed ledger. But what makes blockchain a big hit is its secure, decentralised and transparent nature. It may quite interest you to know that financial services have been facing several challenges for a very long time.
As a solution, blockchain has enhanced transparency and security. For example, no data can be altered and everything is secured, authentic and correct. Some of the use cases of blockchain in finance include cross border payments, lending platforms, credit score, invoice management and billing solution, fund investment, political funds, stock exchange, and more.
Artificial Intelligence (AI) is another powerful technology that is being widely deployed by financial services. Mainly used for real-time analytics and monitoring. And during the time of any threats, Artificial Intelligence also excels at creating instant alerts. By combining artificial intelligence and fintech companies, people will be able to make smart, agile decisions, cutting man-hours and reducing time investment for the long term.
In addition to this, Artificial Intelligence provides a wide range of benefits including
- It can enhance efficiency and productivity through automation
- Human biases are being reduced
- Quality has been improved to a great extent
So here comes big data in fintech. For those who don’t know what big data is. It refers to the large amounts of data being gathered, managed and analyzed precisely. Though, this one being a complex technology is highly preferable in the financial service industry for improved customer analytics, predictive analytics and real-time analytics.
Now you must be wondering what big data in fintech is doing? Well, it’s time to delve into the crux.
Billions and billions of dollars are found moving across the global markets daily. Therefore, you need tools and technologies to not just enhance online banking but also seek improved risk assessments in no time. The value of this data is intensely dependent on how it is accumulated, handled, put away, and deciphered.
Accordingly, fintech organizations would now be able to come up with informed decisions, fraud detection and prevention, risk assessment on improved customer service, better customer targeting, top channel performance. So how big data has revolutionized finances on one to one basis.
One of the best ways to attract and keep your customers in touch with you is by understanding user behaviour and offering them more personalized services. By collaborating big data analytics and fintech, businesses won’t be able to just deliver improved services but also conduct precise decision-making strategies. On that note, several traditional banks are found addressing FinTech platforms these days. I guess even they have accepted the fact that to make their services more appealing is the only way out to survive.
The finance sector has become extremely competitive. Therefore, one has to incorporate technologies and smart devices to remain a cut above. By using Big data analytics, operations can be conducted in real-time and deliver the best possible outcomes.
Security breaches are inevitable. Therefore fraud detection and prevention is a crucial aspect here. There was a time when credit cards were considered one of the highest security risks. But today, these cards are used to interpret buying patterns (in a good way).
Also, gone are the days when on stealing information, a bank or a fintech company could do nothing about it. Today, they can instantly freeze the card and prevent a high amount of damage control. Plus notifying customers of potential security threats is an added advantage.
There is no clear winner when it comes to fintech or financial software development today. Every organization has the opportunity to forge a new fintech future and win against its competition. So that’s all for now! If you still have any queries regarding financial software development services, feel free to mention that in the comment section below.