I use digital payment apps or online banking services each day and still wish one day I could complete my transactions just by thinking.
From carrying hard cash to the digital wallet or standing in a long line for money transfer to instant online fund transfer, we have witnessed a broad range of transformation of financial services. When you look at any new technology advancement, you will find that they all are molded to develop more efficient, automated, faster and secure financial services for customers and financial institutes.
Advancements in Finance Technology
In this article, we will take a look at emerging technological advancements that are ruling the frontiers of the finance industry.
Advanced Customer Intelligence
Providing the best customer experience is always the top priority of any bank or financial institutes and technology has made it easier and more efficient whether it's online complaints portal or digital verification. In the near future, new emerging technology like Artificial Intelligence will definitely change the way banks handle customer interactions.
Several banks are developing AI based chatbots to enhance their customer experience. For instance, these advanced chatbots would provide better personalized tips and suggestions based on customer's past experience, spending habits and credit history. Since these chatbots are the part of the system so they can communicate faster internally with different system and databases to access and update more personalized information.
Few banks like OCBC also launched the first AI powered voice assistant in Singapore. These voice assistants can talk with customers like a real person and provide basic details about bank services. Although, there is still much progress to be made with voice interfaces to provide a truly frictionless experience.
Reformed Digital Banking
The new generation of virtual bank institutions is significantly reforming digital banking. These banking institutes are completely operating digitally without any physical presence. For instance, Starling Bank is providing a digital banking platform to track, manage and operate your different bank accounts in one place.
Fuze - an advanced tool which allows you to combine all your different credit and debit cards in one single card with an electronic display.
Revolut – a personalized bank account with embedded tools used for budgeting, monitoring savings, and control spending.
Smart Finance With IOT
Insurance, one of the major vertical of the finance industry is highly benefited through "Internet Of Things (IOT)" devices. Now, insurance companies are using various IOT devices to understand better their customer behavior, collect and process millions of data points in few seconds for providing more personalized financial services.
For instance, automotive finance companies are using "in-vehicle telematics device" to track and record car mileage and understand driver behavior for improving the insurance claims process. It has helped insurance companies to cut the cost of the claims process by as much as 30%.
The Insurance Regulatory Authority of India (IRDAI) is also planning to bring in fitness wearables and other Internet of Things (IoT) devices under health insurance coverage. This approach will facilitate accurate insurance underwriting, with both customers and insurance companies gain tangible benefits.
Entry of Blockchain Technology
The core value of blockchain technology revolves around a transparent and trusted transaction between two untrusted parties in a trusted environment without centralized monitoring which makes perfect use case in finance.
From digital cryptocurrencies like Bitcoin to ultra fast P2P payment solutions, blockchain had made a significant difference in finance. Moreover, blockchain has helped in eliminating the need for intermediaries by creating a decentralized network and thereby, reducing transaction cost and processing time.
Next move of banks and financial institutes is to solve one of the all time biggest challenge - Cross Border Money Transfer using blockchain. In fact, Singapore's central bank sent a payment to Canada using blockchain technology last month.
I presume you have heard about Initial Coin Offering (ICO) or Security Token Offering (STO) and how they are disrupting investment market or crowdfunding. In 2018, more than $16 billion were raised through these offering and the number is expected to grow higher in coming years. Although regulatory authorities have different opinions about these new offering and in-fact few countries like China, India has banned the use of cryptocurrencies to control the money laundering or transfer frauds. In the coming future, we could expect new banking regulations and compliances in favor of blockchain and mass adoption of blockchain technology.
Better Cyber Security
Cybersecurity is the top priority in financial services as the more adoption of technology more vulnerability to cyber attacks. The major security-related issues are:
- data breaching
- account hacking and fraud transfer
- fraud KYC and AML
- malware intrusion
Biometric technology provides a better solution to authenticate and provide access to the system based on the automatic and instant verification of an individual's characteristics which believed to address some of these security and privacy issues with better efficiency like preventing frauds and money laundering.
On the other hand, we discussed how IOT devices are disrupting banking, payments, and insurance but increasing use of the Internet of things (IoT) has also increased the threat to sensitive customer data. Connected devices provide more endpoints through which hackers can access information and infiltrate company systems. To protect themselves, 65% of financial services companies are using cloud-based security.
Finance is a big world with constant innovation. New emerging technologies are making digital banking more efficient, secure and customer centric. If you’re contemplating how you should decide your next strategy, you need to focus on: - ---automation of financial processes
- take advantage of emerging technologies - AI, IOT or Blockchain to improve your financial services and cut down operating cost
- customer oriented platform for a better experience
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