Technology is an integral part of businesses across all industries, and financial services are no exception. Not keeping pace with the latest developments can push organizations behind competitors and affect the quality of customer experiences. Providers in the banking, finance, and insurance sectors have a valid reason to join the tech bandwagon to stay in the race.
As of 2023, there are 988,019 finance and insurance companies in the US, which spells stiff competition. Setting oneself apart in the landscape takes more than high-quality services and top-notch customer experiences. Technology can be the real game-changer to gain a winning advantage as a financial services provider.
Before foreseeing the future of innovation in the industry, let’s start backward. A 2019 survey showed that 97% of financial services firms were on the road to digital transformation. The pandemic accelerated the process because technology was the savior during the lockdowns. Tech transformation continues to be one of the top priorities for these providers, even as normalcy resumes.
Making the most of innovation is about adopting the right technologies. Let us list the ones transforming the financial services landscape.
With the rise of mobile usage, consumers prefer doing things on the go. Mobile banking became the new normal amid the pandemic, with the lockdowns leading to a 200% increase in new registrations. The trend isn’t slowing down because nothing matches the ease of paying the bills, checking balances, and making deposits with these palm-sized devices.
According to Deloitte surveys, 72% of customers access their accounts through their mobile phones. Clearly, having a mobile app is essential for banks, insurance companies, and wealth management service providers. It makes a wise investment that delivers quality experiences and drives retention in the long run.
Artificial Intelligence (AI) is another tech trend shaping the financial services industry. Statistics show that adopting it as a core component of their digital strategy can help boost revenues by 34% and economic growth by 26%. AI can automate low-value repetitive processes to reduce dependence on humans and free up employees for high-value projects.
At the same time, AI-based chatbots ensure availability to customers. Advanced ones can understand user behaviors and customize their experiences with contextual recommendations. But the big question in this context is “Artificial Intelligence in Financial Services: Convenience or Catastrophe?”
Annuity Straight Talk notes that AI can surely cut costs for providers, but relying only on the recommendations of robo advisors may not be the best option for customers. AI, in its current state, may miss out on suitability and fiduciary standards, leaving room for improvement.
Financial services have widely adopted big data analytics to make better investment decisions with consistent ROI. Additionally, service providers leverage big data for customer analytics to deliver personalized offers, perform risk assessments, and fraud and security threat detection.
Implementing this innovative technology can help financial services companies step up their game in several ways, from delivering better customer experiences to minimizing risks and increasing profits. Not to mention, data-driven decisions are way better than the ones relying on intuition and guesswork.
Blockchain technology is another game-changing trend in the financial services segment. Big players are into this innovation, with JPMorgan investing in blockchain projects. Statistics show a giant leap for the technology, from a market size of 0.28 billion USD in 2018 to a projected figure of 22.5 billion USD in 2026.
As it is distributed across different computers, the technology offers the benefits of immutability, transparency, and security to providers. These features can streamline financial services’ infrastructure by speeding up core processes, implementing smart contracts, controlling financial fraud, and increasing security.
Effective use of Cloud Automation can boost efficiency and reduce business costs, including banking and financial service providers. In 2021, cloud workload adoption in the industry was at an impressive 54% in the US. The widespread adoption of the technology is due to its ability to enhance operational resilience and meet customer expectations.
Beyond the obvious benefits, cloud computing reduces the need to work on non-core functions such as IT infrastructure and data centers. It empowers financial institutions with flexible scalability, as they grow and expand their customer base down the line.
Emerging technologies have a lot to offer to financial services providers, from streamlining their internal operations to enabling high-value customer digital experiences. Organizations that adopt these trends sooner than later can expect a reputation boost in the long run. Moreover, they can future-proof their operations and gain on the customer retention front.