An Overview Of How Digital Is Impacting The Financial Industry

By Wisetek Store

As tech innovations and digital services become an important aspect of everyday life, the financial sector hasn’t been left behind. Emerging innovations have paved the way for new services, which have, in turn, disrupted the existing services.

Digital transformation has become an ongoing trend, thanks to the emergence of new financial services. With this transformation, consumers have started to move towards digital products and experiences, forcing financial companies to rethink their existing playbooks.

As this revolution continues to impact the financial sector, several questions will need answering. Examples of these questions include:

1. Are traditional stores still necessary or even viable?

2. What kind of empowerment has the modern financial client received?

3. What products and services can a bank use to cater to its customers?

4. Should banks consider investing in the digital landscape?

Below is a look at some of the key changes that have helped transform the financial sector.

1. An Evolving Workforce

Emerging technologies lead to the development of new professions. As a result, the workforce in financial institutions keeps evolving every few years. According to a LinkedIn study, some of the top jobs in this sector include:

• Paraplanner

• Software engineer

• Investment banking analyst

While this continues, the traditional jobs have forced the existing workforce to acquire a new skill set to better meet customer needs. Examples include HR and project managers, salespeople, and customer service reps.

Advances in the tech industry, more so in AI, have aided in creating an environment where traditional positions are at risk of becoming obsolete. The only way out is for the workforce to acquire new skills that will enable them to meet the rising challenges confidently.

2. Fintech

Fintech refers to an inclusive term used about financial institutions, e.g., banks interested in utilizing existing software and hardware capabilities. It can also refer to the systems in question.

While the term today mainly refers to digital banking technologies such as blockchain tech, wallets, and digital banks, it referred to credit cards and ATMs in the past. Automated chatbots, spending tracking, and online budgeting tools are good examples of how Fintech has changed the financial sector.

Pain points at each level, e.g., customer service and budgeting, are addressed swiftly and competently. Today, robocalls can help notify you when a suspicious charge gets made to your bank account. Remember when you had to call the bank to address such issues?

These are examples of technologies transforming the financial sector and leading it into a whole new direction. Financial planners, credit card companies, lenders, and banks have had no option but to do everything in their power to try and catch up.

The one thing that remains true is that Fintech is here to stay. It will continue to grow fast, and a time may come when it will need to branch into new directions. You can trust that it won’t slow down in the foreseeable future!

3. Blockchain

People often associate blockchain with cryptocurrencies like Bitcoin BTC/USD. But the reality is that this technology offers many opportunities in various sectors. Blockchain uses a ledger system that utilizes stringent controls allowing for auditable data.

While it may seem like a tech best left to the computer nerds, it’s a technology that will easily transform the world in the coming days. Its ledger system has assisted in creating trust among its users, thereby reducing human errors and increasing transparency.

It explains why banks, AI companies, and stock exchanges have rapidly adopted this technology. Going forward, blockchain and its associated technologies will likely significantly impact logistic technologies and the financial services sector.

4. Digital Banking

Not too long ago, banks were offering incentives to customers to open a bank account. Offers such as toaster ovens and tote bags soon gave way to new cashback offers, free checking, no fees, and maintenance fees.

Banks gave these offers hoping to get customers to walk through their doors where they could then make a sale. Today, banks have no option but to provide certain features, as they are a part of the digital landscape.

For example, it’s hard to imagine a credit card company or bank operating without a mobile application. The application should enable the account holders to pay bills, send money, and track expenses.

Digital banking has become the ‘new normal’ and has gone beyond providing online access to customer accounts. Over the last few years, digital banks have become more available and widely accepted by the public.

5. Artificial Intelligence and Machine Learning

AI and machine learning are expected to leave a huge mark in the financial industry. Currently, credit card companies and banks have started using complex algorithms to detect and prevent fraudulent transactions.

Fintech startups backed by multinationals have assisted in pioneering some of these technologies. With it, they have improved customer experience and benefitted customer service.

Financial institutions use similar technologies to protect login credentials and mobile banking information. Apart from fraud detection, companies also use AI and machine learning for regulatory compliance and to gather information on consumer behavior.

Conclusion

There’s no doubt that tech innovations have changed the way people think about the world around them. As seen above, the Digital revolution has had a large impact on the financial industry, and this isn’t expected to change anytime soon.

Digital has affected almost all aspects of the financial industry – from how consumers analyze their financial health to how they conduct their banking. You can expect more changes in the coming days as digital technology continues to evolve.