No doubt, the advent of technology in the financial services sector has several benefits. The global finance sector would not have grown to the current size without the use of software solutions. Discussed below are some of the advantages that technology has brought into financial services and the banking sector in general.
Mobile connectivity technology has enabled almost everyone to access open banking services easily. It is in sharp contrast to the traditional banking system that allowed only for limited coverage, usually only in big cities and towns. Nowadays, signing up for financial services is just as easy as a few clicks on smartphones or tablets. Technology has enabled FinTech companies to even break geographical barriers in terms of coverage.
Financial services technology also brings much-needed convenience to users as opposed to the traditional banking ecosystem. In recent years, it has become possible to do almost everything through mobile banking technology. It includes signing up for the service, making customer inquiries, payments, accessing loans, and transferring funds. Some financial technology companies have user-friendly mobile applications that enable customers to access their services from anywhere at any time. Such apps have eliminated the need for consumers to queue up at brick-and-mortar banking premises before they can get services.
The other benefit of financial technology solutions is that they are quick. Transactions are completed in seconds. It is crucial, especially in this fast-paced world where time is of the essence. Traditional banking systems’ processes could easily take days to complete. However, that is no longer the case nowadays, thanks to FinTech solutions.
Technology also addresses safety and security concerns in the financial services sector. The banking system comprises loopholes, which make it risky and prone to theft. However, the development of software solutions in the financial services industry has come up with fraud and breach detection methodologies that ensure one’s funds and private data are safe and secure.
Overall, financial technologies have managed to enhance customer experience. Smart contracts, mobile payment, credit card, and chatbots systems have greatly made the client’s life much easier. There has also been a significant reduction in human error. Most queries can be handled online in the comfort of one’s home.
Artificial intelligence technologies have also greatly enhanced the customer experience in financial services. It has enabled personalized experience through its use of big data. No doubt, customer experience remains one of the top advantages of tech in finance, considering that clients take up a central role in the entire system.
How is the technology used in financial services?
1) Big data management with AI
Big data in finance refers to the petabytes of unstructured and structured data that is obtained by banks and other financial institutions from online platforms. Artificial intelligence and machine learning systems are used in financial services to carry out tasks, such as risk assessment and fraud detection. The technology is also useful in the financial services industry when it comes to AI-driven support, predictive analytics, and personalized experiences.
2) Digital banking
For years, digital banking has been among the front-leading applications of the financial technology revolution. There has been a sharp decline in traditional banking, with consumers gradually embracing the digital one due to its convenience and efficiency. The trend in the exponential adoption of digital banking solutions has also been a result of the Covid-19 pandemic. Lockdown regulations affect most regions. According to research, some areas have experienced an increase in FinTech apps use by over 72%. The technology has enabled people to do various banking activities, such as making payments, taking loans, transferring funds from almost anywhere.
3) Digital payment technologies
The digitization of financial services has also resulted in a disruptive change within the sector. Nowadays, there are software solutions in place that enable people to make payments online using their smartphones. It has helped further advance the globe toward a cashless society. The digital payment technologies front has largely been enabled through mobile connectivity.
4) Security solutions
No doubt, security and privacy are of the utmost importance in the financial services sector. New technologies have been roped in to enhance these. As more people begin to use FinTech solutions, the safety of their funds, personal data, and transactions becomes a matter of prime concern. Several new technologies have been invented to ensure that modern-day financial services are secure. These include biometric data, tokenization, and encryption. Technological tools ensure that all requirements regarding the use of data privacy are met. Besides, they also automate requests for tampering with users’ personal data. The tools are also used for system security testing, fraud detection, code review and audit, and advanced risk systems. These have enabled the modern banking system to be more breach-proof as compared to the traditional one.
5) Analytics and reporting
Data science and analytics play a central role in the financial technology revolution. The ability for FinTech companies to process huge quantities of data and come up with meaningful insights through data analytics has had a massive impact, particularly in the insurance industry, where risk management is everything.
6) Risks management
Technology has also opened up new risk assessment methodologies in the financial services sector. Some big players in the industry have developed a social credit scoring system using big data. It has helped them assess the risks involved before issuing out loans.
It is in sharp contrast to the past decades where risk assessment could take weeks or even months. Nowadays, artificial intelligence algorithms can execute the task in real-time, enabling quicker decision-making and better profitability for service providers.
Software development solutions have disrupted a lot of industries, and the financial sector has not been spared. Their world has witnessed a myriad of tech tools being implemented in the financial area. Technology in financial services has great benefits, such as improved security, speed, convenience, coverage, and customer experience. Various technologies have been used in the industry. These include blockchain and cryptocurrencies, big data and artificial intelligence, cybersecurity solutions, and digital banking.