Fintech: driving digital transformation in financial services

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(Last of three parts)

AAnyone who has transferred money to someone else’s account without having to deal with a bank employee – by email, text, call or physical visit to a bank branch – is no longer totally tech-savvy. financial. But keeping up with market developments can be dizzying, as fintech has grown exponentially lately, helped in part by the global health crisis which has provided the impetus to re-examine processes and put the customer at the heart of solutions.

Fintech trends have been and will continue to be disruptive, especially now that mobility restrictions since 2020 have forced financial institutions to take a hard look at what a digital economy will look like. Looking at banks’ practical responses to staying agile during the pandemic by looking at processes that can be automated and made more customer-centric, we can see that financial institutions have already set in motion what could be the beginnings of the digital transformation.

In some countries, financial companies are taking proactive steps to understand how their organizations can benefit from the wide range of available and emerging technologies. The experience of the last two years indicates an acceleration of technological innovation in the years to come. Making sense of all the buzzwords can be a task for the uninitiated in the world of fintech. It would be wise to identify technology trends to focus on based on their impact on the industry and various organizations.

In part one of this three-part series, we discussed the key themes anticipated over the next two years in the fintech market in Asia. In the second, we looked at tax considerations in the Philippines. In this final part of the series, we take a look at some of the technology trends worth watching as the industry continues to experience dramatic change.

WHITE LABEL FINTECH
White labeling allows companies to sell products without incurring significant development costs, time, or regulatory compliance. Also called “Banking as a Service”, it is an authorization to brand and sell products or services developed by another company. This allows fintech companies to create a branded front-end offering layer on white-labeled application programming interface or API-enabled platforms.

This solution leverages the innovation ecosystem without the need to reinvent, reinvest, and go through the full technology development lifecycle. It dramatically narrows market offerings to customers and seamlessly integrates technological innovation, creative product offerings, and compliance requirements in a highly regulated industry to better serve customers.

White labeling is an interesting and attractive option for businesses looking to get started in the modern digital world. It’s a strategy for emerging companies to reduce risk and free up resources to focus on what they do best: developing products, building the brand and growing their customer base. For fintech startups, white label solutions allow them to meet customer demands, minus the learning curve. Companies using these solutions will have limited control over product development, however, and downsides can range from bugs and security weaknesses to non-compliance with the law.

DATA AGGREGATORS
A client’s financial footprint is spread across various institutions, instruments, and platforms, making it difficult to get a complete view of their transaction history. Data aggregators bring together customers’ bank accounts, mortgages, brokerage accounts, and credit card data, among other things, so that they can provide a financial view of customers, regardless of the channel and the companies with which the customers are connected. customers transact. To do this, they use APIs used by fintech companies through which customers connect to their platforms.

This large-scale data aggregation is also the backbone of an open banking system and a fluid financial ecosystem. Data aggregation powers a wide range of fintech applications to provide on-demand financial services such as advice, loans, faster money transfers, and more. The portability enabled by data aggregators reduces paperwork and allows customers to improve eligibility and access to better products/services. With a free flow of data in the financial ecosystem, companies can have a better view to offer personalized products in real time.

However, the connection of data aggregators with many institutions can be likened to several points for possible breaches and leaks. Security risks can also arise from web data scraping, a process that involves a computer program connecting to a bank’s website using a customer’s credentials and reading code to extract financial data. The industry, however, continues to seek superior ways to aggregate data without compromising customer protection. However, this raises the question of stricter regulations establishing guidelines on how financial data is accessed and stored securely.

ROBOTIC PROCESS AUTOMATION OR RPA
Customer experience builds brand loyalty. Financial institutions, in turn, increase revenue and margins based on customer loyalty. As a result, companies are increasingly automating their core operations to focus on improving customer experience and loyalty.

Robotic Process Automation or RPA accomplishes mundane, repeatable backend processes more efficiently, faster, and more accurately. RPAs are simple, flexible, cost-effective, and quick to deploy, improving productivity while improving maintainability and incremental revenue. RPAs ensure error detection, compliance, real-time reporting and insights in a highly regulated fintech industry.

Automation is a tremendous asset for operational efficiency. The future popularity of RPA in the fintech world will likely be due to its usefulness for compliance and regulatory needs. Through automation, companies are able to efficiently maintain audit trails for every process, ensuring high compliance.

VOICE OPERATED PAYMENTS (VEP)
More and more people are getting recommendations, searching for the best deals, and performing tasks using rapidly evolving voice assistants (e.g. Alexa, Siri, Google) backed by sophisticated natural language processing and artificial intelligence. It is estimated that the number of devices compatible with digital voice assistants will double to 8.4 billion by 2024, providing an ecosystem that is smarter and more connected than ever.

Many banking services are quickly integrated and can be accessed via voice assistants. As voice encryption, voice biometrics, multi-factor authentication, and voice tokenization advance, a secure voice assistant has the potential to disrupt how customers pay in the future. The pandemic and millennials comfortable with voice input will accelerate adoption. VEP is expected to be used by 31% of the US adult population in 2022.

This technology enables a seamless, end-to-end, integrated concierge-like experience, allowing customers to better multi-task. With digital payment being the largest segment of the global fintech industry, voice integration with digital touchpoints will separate the fintech leaders from the laggards. To generate new opportunities, growth, and leadership, fintech players will need to continue to rapidly adopt disruptive VEP technology.

As we keep tabs on these technology trends and many more, we will continue to witness shifts in consumer behavior, which in turn will fuel organizations’ appetite to embrace and capitalize on this wave of technologies. ‘technological innovation. There is, however, an element of uncertainty in technologies that, while disruptive, have yet to pass regulatory scrutiny. Financial firms will have to look for the best way to jump on the bandwagon, so to speak – to work on their own projects or energize their collaborative spirit and forge alliances with industry peers to push new technologies to a wider adoption.

The potential for these technology trends to help make all the difference in how processes are improved and productivity increased can be staggering. Ultimately, however, leaders will need to get back to what matters most when embracing innovation: improved customer experience, service transformation, and a proven path to successful business models.

This article is provided for informational purposes only and does not replace professional advice when the facts and circumstances warrant it. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

Anurag Mishra is a Senior Technology Consultant at SGV & Co.

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