This decade has certainly been the era of digital transformation and we are seeing how every aspect of life is being influenced by technology in one way or another
FinTech is taking over with even more speed now. We have witnessed some significant changes and advancements in the past few years within the finance industry. The most traditionally rigid industry has become more and more influenced by technology slowly and steadily. The hundred-year-old brick-and-mortar mindset is finally changing. Even the most established financial institutions have to be relevant to survive post-2019. There have been some significant digital reformations which have affected the customers individually all over the world.
The complete transformation of the finance industry from traditional to digital will take time but it will happen one day in the near future. Technology will dominate almost every aspect of the finance industry in order to provide frictionless customer experience.
Top 5 Digital Trends in the Finance Industry
The rise of FinTech has impacted the industry hugely. Obviously, anyone who owns any form of money gets affected. Below discussed are the 5 trends that are impacting the finance industry:
1. Open Application Programming Interfaces (APIs):
Application Programming Interfaces or the API is giving great freedom as well as control to the consumers over how they interact with their finance providers. Open banking APIs have expanded banking ecosystems that not only includes just financial services but, in fact, aims at improving a consumer’s lifestyle. APIs make consumers consent to the center of interaction. Thus there is an easy flow of information and intuitive interfaces along with the security of data. The global regulatory bodies make banking organizations enable consumers to share their financial data securely with third parties. APIs make account and payment data available through a secure application.
2. Mobile Banking:
Only the finance industry is at a place where mobile is full-on ahead of online services. The youth has trouble remembering when they last step a foot in an actual bank. In today’s digital banking environment, we are able to do most of the banking from deposits to loan application on the mobile phone. Today, customers don’t want pretty buildings. They want 24/7 access, fast actions, easy-to-use applications, and minimum human contact. The upcoming year will see even more of a focus and development on mobile banking. The customer-centric service for a bank is now defined as making it available on the consumer’s mobile phone.
3. Artificial Intelligence:
One of the most exciting trends in FinTech is the use of artificial intelligence. AI has the power to consolidate external and internal data to predict customer behavior in real time. With rich and accessible data, financial institutions of all sizes can predict what their consumers want and when. Having these capabilities have a significant appeal for the banks because it helps to minimize losses and provides value to customers.
Artificial Intelligence software has the ability to recommend the next actions and maximize success rate. At the same time, it provides efficiency and security to the consumers which enhance their banking experience. AI-driven chatbots and advisors are always there when the customers need them which give them convenience. Machine learning algorithms have the ability to multi-task which a single persona banker can never do. With insights and figures contextually delivered, customer’s everyday behavior can be changed proactively.
4. Digital Currency:
Last 5 years have seen the development of a lot of digital currencies, especially Bitcoin. The technology behind all these currencies is blockchain. Right now it is just used for developing digital currencies and making secure payments. But the technology has a lot more potential than that. Blockchain allows safe and secure trading of almost anything like money, royalty fees, copyright, ideas, etc. At the same time, it also eliminates the middleman so that the transaction cost comes down significantly. It can also manage investments and real estate with a minimum security risk.
5. Money-Management Apps:
One trend seen these days is the plethora of money management apps in the market like Mint, Personal Capital, Credit Karma, Acorns, Coupon Sherpa, etc. Though different apps have different expertise to offer, they are mainly all about providing a real-time view of your personal financial accounts and advising about the next best move. They are focused mainly on investments and long-term savings.
Some apps also help monitor your spending and help to create a proper budget and to stay within that budget so that you can save in the short term as well. Apps like Credit Karma also offers your credit report so that you can know how to improve it if you are planning on taking loans and other such services.
Changes in Individual Customer Due to FinTech
Social media has become an important part of customers these days. Most customers have become tech-savvy and have become habituated to performing extensive research before choosing a product or service. They want insightful service along with authenticity. They have also become impatient.
Today’s customers want high-speed in answers, processes, product development, advice, and even interaction. They expect their queries to be answered and feedback to be implemented immediately. Because the customers are tech-savvy, the financial institutions that have been shielded from technological exposure are immediately dropped like a hot cake.
Due to FinTech, consumers are more armed with information and therefore have naturally higher expectations. They know what they want and will accept exactly that only. This change in the customer’s behavior calls for more transparency first.
Digitalization of Personal Finance
Everyone always manages personal finances individually in some way or the other. It is a general consensus that managing your money is the most important aspect of life. Now the customers start young because they have the benefits of technology at their disposal. A lot of things are done automatically, so they do not have to learn complicated financial tasks. There are interactive websites and mobile applications that help them handle multiple transactions within their budget.
Here are a few tasks that a person does on a daily basis under the influence of technology:
Online shopping is a fad that never ended. In fact, it just keeps on expanding. Now you can easily buy groceries, perishable, and non-perishable food items on the internet. You can also automate your purchase to be repeated at regular intervals and delivered at your doorstep at a stipulated time. It not just saves time but gives you an idea of what is consumed and at what frequency. It keeps grocery purchase within the budget and reduced redundant purchases. You can also track your spending and make changes to make food purchases more efficient.
Automated Bill Payments:
A lot of bills like cable, mobile bill, loan amount, etc. do not change. The amount remains the same every month. Thus you can easily enrol those for automatic payments. Automatic bill payment and loan repayment ensure that you do not forget to pay it on time and thus do not have to incur any late fees ever. No hassle of sending the check beforehand and tracking the payment. Also, you receive all the receipts in your email which helps you track all the bills. On the plus side, there are huge discounts available for online bills and loan payments which help save some money too.
Personal finance is a blend of many things. It is not just about spending. It is as much about budgeting too. Any person’s goal is to not spend over the money limit and stay well within the budget. You may also have seen your parents do the same thing on pen and paper. But now, even they use online budgeting platforms which help manage the budget on the go. A single file can be accessed from a phone, a tablet or a laptop. These apps also help highlight the problems in budget and give suggestions on efficient spending.
Many mobile applications like Digi Locker help scan important documents and keep them safe and protected in the mobile phone. You can scan anything from bills to your ID cards and save them in your phone so that you can access them whenever you want. Anytime you need the documents – in office, in banks, in loan institutions, anywhere and you have them with you immediately.
Tracking the Spending:
Many apps help you track your credit card spending so that you can monitor your debt scenario and stop when necessary. Such apps give you your credit score so that you can adjust the cash-credit ratio accordingly. You can track the balance and make sure you are paying the right interest amount affordable to you.
FinTech has reached all the financial aspects of life. From day-to-day spending to long-term investment, technology is advising humans on personal finance all the time. Managing money becomes a lot easier with the help of technology. Of course, you still need to make your own financial decisions. But at least you do not have to rely on advice which can involve human mistakes. Finance has become a physical currency independent thing which provides a secure environment and lowers costs. The changes seen till now are nothing compared to what we will see in the future. The future holds immense potential and excitement with the ability to meet consumer demands like never before.