Financial technology (also known as fintech) companies are growing in huge numbers across the globe. In over a decade, these businesses have redefined, transformed and reshaped how financial services organisations work. Businesses such as funding platform Kickstarter, mobile payments and financial services group Square and peer-to-peer (P2P) lender Prosper have already disrupted traditional banking solutions and are completely changing the way in which consumers interact with financial services.
Driven by huge amounts of investment and growth, this sector will only continue to prosper and connect financial services with consumers. So what can expect to see from fintech over the next few years?
Future of financial services
There are a number of technology trends that the financial services industry will start to see:
- Robotics – according to the PricewaterhouseCoopers report ‘Financial Services Technology 2020 and Beyond’, advancements in robotics and artificial intelligence (AI) will impact the financial services industry by 2020. In the near future, banks will be replaced by platforms that are run almost entirely by algorithms and robots, which will be able to automate repetitive and rule-based processes – typically processes located in the back-office – to capture and interpret existing IT applications to enable data processing, manipulation and communication across a number of IT systems.
- Social trading – A total of 18 major stock exchanges are now accessible through social trading; highlighting the growing influence of trading on social media platforms. Soon this will develop into a widespread trend with lending, borrowing and trading on social media platforms becoming the norm. Social trading introduces a new way of analysing financial data, allowing individuals to benefit from other people’s knowledge and helping them gain a better understanding when trading. With social media deeply engrained into consumer lives, this trend will grow enormously.
- Increased data analytics – according to recent research from Accenture, 71% of financial services at a global level are exploring the benefits of data analytics and big data. In the next few years, this will go a step further as banks become identity brokers; tailoring products and services based on advanced customer profiling data. Technology now allows financial services to gather huge amounts of data to tailor experiences, services and products to customer needs. This will become even more important as the industry continues to see increased competition and regulations such as Europe’s General Data Protection Regulation (GDPR).
- A mobile first approach – this year, mobile devices will account for 75% of all internet use globally, a figure set to grow further to 79% in 2018 according to media agency Zenith As such, investment opportunities will soon need to be presented to consumers through mobile devices, as a ‘mobile first’ approach will be imperative to provide users with a service that is available anytime and anywhere. Consumers will be notified with new investments and deals, all based on an accurate customer profile
Keeping up with digital change
In order for the financial services industry to keep up with fintech companies and digital change, banks must look to broaden their scope and be smarter; ensuring the network is able to meet increasing demand while adopting new technologies to keep consumers happy. The way businesses can do this successfully is by investing in big data and cloud technologies to accelerate innovation, cope with demand and optimise efficiency.
By combining back-end cloud-enabled infrastructure with big data application platforms, financial services can crunch more data and respond quickly to consumer demand. As well as this, by applying front-end mobile user needs when developing new products, banking organisations can put the financial service experience completely in the hands of the users and ensure services are 24/7, mobile and on-demand.
For example, China Merchants Bank (CMBC) is cooperating with Huawei to make use of its agile information and communication technologies (ICT) to help strengthen its customer-centric experience. Using big data and cloud technologies, CMBC is able to integrate data in real time, cut the margin of error in financial assets by half, increase conversion rates and speed up personal credit reporting. As a result, customers are able to experience on demand and real time services, no matter what platform they are using or location they reside in.
Traditional banks need to reflect their value proposition in the light of the emerging fintech revolution and legislation such as Europe’s impending new Payment Services Directive (PSD2) that will open up banks to competition. For the first time, banks are under significant threat and must work hard to stay relevant and value creating for customers on their terms.
Creating a better connected world
People want to go online anytime, anywhere, on any device. They want to experience high quality content and applications from the convenience of their own mobile office. At the same time, as more enterprises move to the cloud there is an increasing demand on network resources.
To address the challenges brought by this digital deluge, financial services organisations must get smarter, not only to meet these challenges but also keep up with their fintech competitors. Using technologies such as big data and cloud will help the industry move towards a better connected world in which everyone can share anything, anytime, anywhere.