Technological change is at the forefront of the financial services (and FinTech) industry.
In the next two years, multiple elements centered around the structure and role of financial institutions will see a drastic shift (i.e. future of payments, cybersecurity, and digital currencies).
FinTech is disrupting the ways banks operate and function. Digital transactions, shopping online, money exchange, and investments have all been placed right at our fingertips – all thanks to FinTech.
Here are five factors that are currently disrupting the finance industry:
1. Shared Economy
“Shared economy” is an economic model that focuses on the idea of collaborative consumption. It is a P2P activity that allows the sharing of products/goods through an online platform. Consumers’ preference for renting and borrowing products has overtaken their desire to buy. Think of Uber, AirBnB, Lyft, and eBay.
Consumers will always need banking services. However, in the future, they may not be turning to banks. With the expansion of services including hotels and cars, there is no doubt that financial services will follow shortly.
Information technology will be used to match providers and users of capital (without needing financial institutions as an intermediary!).
2. Customer Intelligence
In the past, customer intelligence was easily measured by surveys and detailed focused groups. However, now businesses have access to a plethora of data. This data allows businesses to see what consumers are buying and wanting to buy in the future.
Analyzing these customer details and activities will allow businesses to create better relationships with their clientele and improve customer relations and decision-making tactics.
3. Artificial Intelligence (AI)
Artificial intelligence (or AI) is having a large impact on finance. With the assistance of machine learning, computers are able to navigate large data sets that humans cannot. AI uses algorithms to not only improve customer service, but can make predictions about future sales performance.
Automation software is quickly replacing human decision making with more advanced technology. Many financial institutions have begun incorporating customer-facing AI, such as chat bots, to replace potential human errors.
AI handles these three data sets well:
- numbers (more efficient than humans)
- text (writing, analysis, and interpretation)
- pictures/images (facial recognition, patterns, activity, and visual interpretation)
Finding (and identifying) fraudulent transactions is the goal in anti-laundering departments. With AI, learning these algorithms and patterns will help predict the possibility of a cyber attack before it even occurs.
4. The Public Cloud
Cloud computing is not a new term to the tech sphere. Many companies/businesses have been hesitant to move their information and applications to the public cloud due to IT security and privacy standards.
Now, financial services are turning towards cloud based SaaS (or software as a service). The cloud has allowed companies to scale usage and access business tools on an as-needed basis. Cloud vendors have better security measures, compliance controls, and privacy in place.
5. Omnichannel Banking
Several years ago, banks began offering multi-channel banking, where online platforms allowed customers to reach call centers for their needs. Therefore, customer touch points increased and client were able to transact within the bank via multiple channels.
Omnichannel only enhances this multi-channel banking option. Omnichannel allows the customer to not only do transactions through multiple channels. It allows customers to interact with the bank as well. Banks need to do more than fulfilling the needs of their customers. They need to anticipate the next big thing – and execute it flawlessly.