It is absolutely impossible to discuss the future of finance without taking into account the changes that can be brought to the industry by digital transformation. And of course, here we should focus precisely on the fintech revolution that is greatly being boosted by common digitalization.
The introduction of digital solutions helps to make financial services more widely available to users from all over the world. In general, digital transformation is aimed at facilitating multiple tasks for users. Today, we can observe the positive impact of digitization processes across many industries. And fintech is not an exception. In this article, we’d like to consider the way how digital transformation is changing the fintech sector.
Despite the fact that many banking and financial institutions still prefer to rely on traditional ways of delivering their services, the pandemic has brightly highlighted the necessity to offer alternative solutions and find new approaches to interaction with clients. And it can be a sign for any financial software company that is looking for a good time to present its solutions to the market.
Since the first COVID-19 wave, the interest in new contactless and cashless solutions is gradually growing. According to various studies, in 2022, nearly 65% of the US population reported using digital banking services. If we take some particular social groups, we will see even higher numbers. For example, among millennials, nearly 80% of respondents said that they regularly use digital banking platforms.
Benefits of Digitalization in the Finance Sector
For many financial companies, the implementation of fintech solutions can be a matter of life and death. The competition is growing greatly these days. While customers are looking for the most efficient solutions that will help them to reduce the time and effort required for getting financial or banking services, banks and other financial organizations need to offer the relevant possibilities to retain existing clients and attract new ones.
Digital transformation can bring multiple benefits to the industry. Let’s have a look at least at the most important of them.
Traditional lending systems are not very effective in the current market conditions, they provide very small space for scaling, and they include a lot of manual processes and paperwork. However, cloud platforms can become a real game-changer here. Thanks to them, businesses that offer lending services can build more sustainable models and use more flexible and better-designed lending tools in their work.
New Approaches to Processing Data
Banking and lending platforms can be enriched with various advanced features that will help consultants to faster get access to users’ data, approve them, and proceed to the next steps. Among these features, we can name, for example, video-based security and digital identity tools.
Moreover, there are advanced solutions that can record user behavior, detect general patterns, and define any possible fraudulent actions.
Simplification of Complex Tasks
If earlier all tasks had to be performed manually, today it is possible to change this situation. Thanks to digitalization, it is possible to reduce the use of human resources and allow employees to focus on more creative tasks instead of concentrating on monotonous processes. With huge volumes of work performed automatically, the majority of tasks become easier and less time-consuming.
Key Trends of Digitalization in the Fintech Industry
Given the current demand for software solutions for the finance sector and the current popularity of some particular technologies, we can observe the following tendencies.
Implementation of Big Data tools
Big data analytics solutions have already proved their efficiency for the financial industry. But now banking and financial organizations need to find new ways to massively adopt such tools for increasing the efficiency of their processes and optimizing the required resources.
One of the tasks that the fintech sector has today is the implementation of new tools that will be able to gather and process data that will be further used to train multiple ML-powered algorithms developed to automate various processes and minimize risks of human errors.
As we’ve already noted, after the pandemic the interest in cashless payments has skyrocketed. Of course, for payments, you can use your traditional credit or debit card, but it will be even more convenient to use a smartphone instead of a card.
Moreover, today there are a lot of new apps and systems that allow you to conduct payments by making just a few clicks without using a terminal. It is expected that in the future we will get even more advanced and simplified methods to make mobile transactions.
This trend is closely tied with the previously mentioned one which greatly highlights the continuously increasing role of mobile devices in our lives. It is difficult to imagine a life of a modern person without a smartphone. If some years ago, online banking platforms were amazingly popular, today, people are even not ready to switch on a laptop when they have a smartphone in their pocket and they can easily get access to banking services using a convenient mobile app.
The role of digital transformation in the finance sector can’t be underestimated. Today, more and more startups and financial organizations come to the market with new fintech solutions that win the hearts of users. That’s why to stay afloat, even giants need to seriously think about the digitalization of their services.