From cashless payments to banking solutions, online insurance organisations have changed the financial industry
Digital transformation has revolutionised the financial services industry across the globe. Integrating advanced technology into financial solutions is no longer just about the technology strategy of the company but it is a successful business strategy. Tech disruption in the financial industry has led to opportunities that are fast and cost-effective. From easy digital and cashless payments enabled by UPI, IMPS, or NEFT to cost-effective banking solutions, easy loans, seamless investment platforms, and online insurance organisations have changed the financial industry. Let's take a look at the digitalisation trends that are going to dominate in the coming years.
First, we will witness more inclination towards digital transactions for all ticket sizes. Digital payments had become very much popular post demonetisation in India but the cashless payments encouraged to contain the spread of coronavirus has accelerated the process. We are expecting more people to also come into the crypto-economy, which is predicted to reach 10 per cent of all transactions by 2030. The digital model will thrive to an extent that anything that is touchless will be the winner.
Another digital trend that is a step ahead in the financial sector is the identification process for opening an account or taking a loan, etc., going completely digital. There is going to be more data standardization as identification for other services also goes digital. This will create a boom in the data security and big data study verticals. Already things such as VKYC have been proliferated to make data collection easier from the individual but still, a lot of software progress needs to be made before full automation is possible.
With Artificial Intelligence, we will see a meteoric rise in customer services and other repeatable activities moving heavily towards automation within the next five years. The customer service AI will become more effective and we can expect to see more chatbots and standardised recorded messages for your queries. The companies will still have to maintain a significant human interface for many evolving business verticals so it is unlikely that FinTech will lead to any significant downsizing.
In the coming time, FinTech companies will increasingly focus on developing their niche products. We will be entering into an era of finance super-specialisation as more rudimentary functions become either automated or, at the very least, outsourced. This will allow companies, especially FinTech companies, to hyperfocus on their market niche and develop products more and more in consonance with their customer base instead of wasting energy, time, and mind space over non-core functions.
Lastly, newer ways of customer and entity assessment will develop along with different services integration. So think of a time when your online shopping site will assess the contents of your cart and because it has an API integration with most banks and then based on your credit history, it will then offer you a certain interest rate on your installment payment options. Or even vice versa, when the banks will assess your online spending habits based on a masked data sharing system (or perhaps a unique rating system developed between online sellers and financial entities) to then make a forecast of your savings to then decide whether to disburse a loan and at what rates. Data-sharing is going to change the way financial services are offered or the transactions take place.
In a nutshell, digitalisation trends are going to advance in all spheres of the financial segment. Gone are the days when customers were not given importance in the sector because now companies will be formulating all their technology and business strategies with the smooth customer experience at the heart of it. There will be more personalization of services and more customisation options. The primary competition among companies would be to retain their market share by constantly upgrading their service platforms.
The author is CEO, CashBean (PCFinancial Services Pvt Ltd.)
DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.