Businesses have been evolving for years with no end in sight. Industries are undergoing changes in processes, goods, and equipment. Many of these advances have recently reached the financial industry.
FinTech has become a popular term in the financial sector and is transforming the structure of the industry. Fintech, or financial technology, is the application of new technology to financial services and products. Big Data, artificial intelligence (AI), and machine learning are already being used to evaluate investment possibilities, improve portfolios, and limit risk. Its goal is to deliver personalized, actionable advice to financial services and investors with greater convenience.
Progressive financial service firms are always looking for innovative ways to improve profitability, efficiency, and client service. The exponential rise of information technology has encouraged corporations to use customer experience management to improve the financial services industry.
And there is more than that, here are six ways to prove that technology is changing the finance industry
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1. Unleashing Blockchain’s Power
The basic goal of blockchain technology is to offer transparent and trusted transactions between network participants without centralized control. The use of blockchain technology has created revolutionary financial services applications. For example, remitting money, especially across international borders, has been a key concern for the financial industry for a long time. A great example is money remittances sent home by ex-pats to family and friends. They have been prone to problems with most remittance centers being notoriously slow and charging high fees.
The blockchain is tackling this issue head-on. Instant payments are made possible by blockchain’s near-real-time processing transactions. It has also reduced transaction costs by eliminating the need for middlemen and creating a decentralized network. You can find out more about decentralized finance with this great post to read and understand.
2. Detection Of Fraud
While technology benefits industries and customers, it also exposes them to fraud and cybercrime. As technology advances, hackers’ tools to steal identities and credit card information have improved. To tackle this, fraud detection technologies have developed. The human and artificial intelligence features of fraud detection have been upgraded. AI can determine if a transaction is normal or not. These machines can process data far faster than humans. Then, the data will be transmitted to a person to assess the risk of fraud and notify the account holder.
3. Banking On The Go
‘Connected banking’ is one of the most significant technological advancements in the banking industry, largely due to widespread mobile banking adoption.
When a consumer opens an account, they are provided a free mobile app to handle their funds online. Digital banking services offer convenience, speed, and security. Customers may now bank from anywhere in the world. This mobility has necessitated more contact between departments within a financial organization. Banks who fail to supply these increasingly required modern services will be left behind by their competitors.
4. Strategic Use Of Data
Banks base lending decisions on the customer’s credit score, while insurers may look at the driving record or need a health check before granting a contract. Innovators who utilize data to enhance financial decision-making are developing as individuals and their devices grow more connected. Some evaluate people’s social networking activities to provide additional data to lenders assessing a borrower’s creditworthiness.
5. Debt Collection
With the rise of technology, lenders have had to reconsider their debt collection strategies. A room crammed with individuals contacting problematic debtors may no longer be the most effective or successful method of debt collection. Instead, lenders like banks use technology to swiftly engage clients in a less pushy tone.
Banks use technology to assist debt collection in three ways:
- Automated Messages. Calling every debtor who skips a payment would be ineffective. Instead, many lenders use automatic response systems that notify borrowers when they have missed a payment due. The message reminds them to pay and who to contact if they have concerns.
- Artificial Intelligence. Many lenders now use interactive voice response (IVR) systems to answer inbound client calls. IVR systems these days are good at answering basic questions and doing basic tasks. Some banks use advanced AI that allows borrowers to adjust loan terms without speaking to a live representative.
- Advanced Analytics. People who refuse or are unable to pay need a different debt collection technique. Banks can use predictive analytics to better assess borrower risk. Credit and historical behavior data can determine whether a borrower is less likely to cooperate and requires a more aggressive approach.
6. Biometric Technology
Remote banking is growing as worldwide customers use less cash. Unfortunately, with digital banking comes greater responsibilities for security and a smooth user experience.
Biometric access control is a worthy substitute for PIN and password. Biometric technologies like fingerprint, face, and voice recognition allow lenders to authenticate customers’ identities before processing transactions. Many banks now use biometrics to verify workers and clients.
The latest technological advances in the finance industry are astounding. Fortunately, these advances have made finance-related daily jobs and operations easier and more efficient than ever before. In this day and age, digital advancement can get you ahead of the competitors, all you have to do is to accept change and live with it.