In 2020, the global COVID-19 pandemic, lockdowns, and other restricting measures had played their part in developing of the financial industry. The health crisis literally accelerated the digitisation and digitisation of banks and financial firms.
Figure 1: Percent of regulators who reported increased fintech usage or offering in light of COVID-19 in emerging and advanced economies.
Increased flexibility in e-KYC, expanded usage of digital ID, remote onboarding, increased transaction limits, and suspended or reduced fees for digital payments are just some of the measures taken by the regulators.
The global pandemic has created an environment for accelerating digital financial inclusion in markets worldwide. That means the financial industry keeps evolving and searching for new efficient business solutions.
“60% of executives say digital transformation is their most critical growth driver in 2022,” according to the PwC Pulse Survey.
The PwC Pulse Survey shows the majority of businesses in 2022 will be using digital technologies to find new ways to fundamentally change their organisations’ customer experience, business, and operating processes, or culture.
The three main digital transformation areas are:
People. There is a direct link between customer satisfaction and employee satisfaction with working conditions. In other words, a customer-focused transformation starts with your people and your employees.
Process. Businesses don’t just adopt technologies for the hype of it. They do it to support existing processes and benefit from them. Decision-makers must focus on the bigger picture: to successfully implement a new approach.
Technology. A business that priorities customer-focused transformation inevitably will be improving technologies responsible for its customer experience.
What digital technologies to explore in 2022?
McKinsey & Company highlights seven advanced technologies that will redefine the financial business in the foreseeable future.
1. Artificial intelligence (AI)
The adoption of AI is gaining popularity in domains like risk management and revenue generation through new products and processes. Banks can use artificial intelligence to enable 24/7 customer support interactions, prevent payments fraud, improve AML processes, perform KYC checks, etc.
The global blockchain in the banking and finance services market is expected to grow from $1.17 billion in 2021 to $1.89 billion in 2022.
Blockchain eases the cost of cross-border payments, increases the efficiency of trade finance processes, streamlines digital verification, and improves regulatory compliance processes.
3. Cloud computing
C-suite executives have realised that the cloud is an endpoint for banks and other financial firms to store data and applications and access advanced software applications via the internet.
Cloud technology can now drive business innovation, cut operational costs, move to green IT, synchronise the enterprise, unleash new talent and new ways of working, build resilient operations, and increase data protection.
4. Internet of Things (IoT)
According to McKinsey, “127 new tools worldwide are attached to the web per second.” IoT gives FinTech firms an advantage over their competitors: it makes more data available for services. Also, the ability to collect data in real time is crucial.
The adoption of IoT helps to collect even more information about clients and customise client service, boost decision-making, improve device-to-device communication, etc.
5. SaaS and serverless
SaaS allows companies to use software without the need to own and maintain it, while serverless architecture removes the need for firms to run their servers.
Thus, infrastructure scaling, developing, and launching prototypes become less expensive, resource-demanding, and time-consuming.
6. No-code and low-code
According to Gartner, a research and advisor firm, “by 2024, low-code application platforms will be responsible for 65% of all application development activity.”
Among finance firms, no-code and low-code approaches are effective in account management, data administration, and payment and subscription services.
7. Hyper automation
Hyper automation can help to reduce human errors and increase efficiency. It also allows businesses to be more flexible and respond to different fluctuations in demand.
According to McKinsey, “account payable processes have the potential to be 60% automated using robots that mirror human actions for basic paperwork and decision-making.”
The future of finance will look different from today. New business models, emerging technologies, and consumer expectations will drastically change the industry. The question is: are you bold enough to start transforming your business now?