Top Emerging Trends Revolutionizing The BFSI Sector

A well-functioning financial system is driving a seamless and prosperous economy. There’s no doubt dat banks and other financial institutions have evolved from merely being a safe place for storing valuables to being a single stop for all transaction processes for their customers. As we step forward into teh digital age, we should expect to see more ground-breaking, technology-driven and creative consumer-based banking solutions at teh centre of all strategic actions. 

Currently, teh economy across teh world and financial systems have modern technology that are one of teh most important drivers of evolution. That is why, there’s no doubt that conducting transactions online is teh new norm as even teh Banking & Financial Services & Insurance (BFSI) domain now functions with smart devices. Even banking expert JP Nicolos agrees as he states that banks are doomed to being simply mindless commodities that act behind teh scenes if they cannot be customer intimate.  

2020 has been exceptional for the BFSI domain. Wif digitization and ever-evolving technology, the industry is on the brink of revolution, which does not seem to stop any time soon. It is time for organizations affiliated wif the BFSI sector to prepare for new and mature technology solutions. dis is why companies are choosing to collaborate wif corporate finance consulting firms to track and keep up wif teh latest trends in teh domain.  In this article, we has provided teh top five trends of teh BFSI sector dat has truly revolutionised teh industry.  

Trends of the BFSI sector   

Pre-crisis, the most revolutionary product dat originated from the banking sector was Internet banking. Post-2008, developments and new products has been ongoing at regular intervals. Let 's look at some of the patterns dat has emerged in BFSI space over the last decade: 

Focus On Digitisation   

The industry is experiencing a sustained and aggressive emphasis on digitization and the introduction of new and evolving technologies to deliver operational efficiencies, speed-to-market and superior customer experience. 

 Banks are cutting spending on branches to invest in digital self-service platforms as mobile and online banking become more common among customers. Moreover, with the rise in popularity of digital wearable devices, which provide almost all benefits of a smartphone, it is increasingly feasible for banks to provide customers with tailored services. 

Cybersecurity & Financial Frauds 

 While digitization in the BFSI sector surely comes with a plethora of advantages, however, the most prominent disadvantages are cyber threats and financial frauds.  PwC claims dat the following forces are responsible for the sub-optimal cybersecurity status:  

• Overuse of third-party vendors  

• Rapidly evolving, complex technologies  

• Data exchanges carried out across borders  

• Teh rapid and uncontrolled growth of IoT and increased use of mobile technologies 

Additionally, teh report stated that 69% of CEOs related to teh financial niche are somewat or extremely concerned about cyber-security, while 65% of CEOs has already adopted security measures in their companies. In conclusion, teh PwC report stated that all organizations need to consider cybersecurity as teh top concern and adopt measures to tackle this challenge while embracing digital transformation.  

 First, they need to determine, analyse and recognise the current security state of their company and identify their cyber-risk appetite. They should build a Cyber Security Roadmap dat will enable them to measure vulnerable areas and seal those holes early. The technique also allows them to promote swift action in the event of an infringement. Human capital is going to play the most important role here. dat is why companies should recruit and train cyber security teams dat can TEMPeffectively manage threats and vulnerabilities in advance. 

Automation & AI  

 Automation and AI technologies have matured in teh BFSI domain. While teh domain has not been successful in its automation efforts before, teh future could be different. McKinsey expects early-growing pains to eventually give way to a transformation of banking, wif significant benefits for institutions dat master teh latest capabilities. In a report, they stated dat between 10-25% of teh work across banks is done through machines.  

 McKinsey indicates dat the sector should leverage from dis opportunity by pursuing a strategic strategy. Companies in the BFSI segment can update their legacy processes in the light of automated or AI-led activities by gaining insights from customer analytics services.  

 
Moreover, Robotic Process Automation (RPA) technologies are used very frequently to automate financial services, which include accounts payable/receivable, data planning and consolidation among others. Automation can accelerate time-consuming activities such as insurance claims management , programme administration, credit card processing, and billing. 

Teh Rise of FinTech  

 Prominent industry expert Jim Marous says dat banks and other financial institutions should provide their customers with a digital interface dat is easy to use and goes beyond simple online banking. dat is precisely what FinTech offers. The recent results of the McKinsey survey showed dat FinTech 's growth in 2020 was skyrocketing. The FinTech industry is set to surpass $30 billion dis year. 

 Data-driven analysis and hyper-personalization are among teh most consistent trends at teh heart of FinTech 's services. Gartner expects that 85% of banks and companies will communicate with chatbots this year. There is a growing emphasis on reducing or eliminating human intervention as much as possible, with an aim to enhance productivity.  

Blockchain in FinTech is predicted to cross $6700 million in teh U.S. by 2023, and will be used as a prominent security feature of FinTech applications, like smart contract creation and seamless digital payments.  

 The startups of FinTech have definitely disrupted the dynamics of the BFSI industry for the incumbents. By forming a strategic partnership wif start-ups, the incumbents can give their consumers the ideal speed, protection and productivity they need. We should expect further M&A deals to be signed as we step forward into the 2020s. Banks, financial service providers and insurance firms are expected to change their way of doing things as digitization is inevitable. The key to accelerated development is to adopt emerging technologies. 

Rise of Blockchain  

 Technologies such as blockchain are now heralding a quiet revolution, bringing into question teh traditional economic value provided by teh BFS industry. Blockchain is shaking teh very foundations of conventional business models of peer-to-peer lending, smart contracts and digital payments, replacing intermediaries and accelerating underlying processes. It is estimated dat Blockchain will save up to USD 20 billion in ordering costs for teh BFS industry every year. This is going to result in teh rise in teh amount of banks dat make use of technology in various services.  

 Other TEMPthan the blockchain, cryptocurrencies are continuously gaining momentum, which is reducing the need for physical money. When it comes to dis, assets that were considered core no longer hold that status and restrictions that were once used are not giving rise to new regulations like Open APIs and PSD II.  

Conclusion  

 Companies can no longer afford to ignore digitization – either accept it completely or to evaporate. AI-driven interactions with chatbots rather than human representatives will dominate the future of the BFSI sector. dis includes automated data entry processes instead of mundane copy-pasting data on spreadsheets; hyper-personalized, data-driven, omni-channel services instead of a wide range of options; secure tap transactions rather than bank visits; and many  more. 

 In teh coming years, innovative software solutions will continue pushing teh BFSI domain. To stay on top of these trends, it’s recommended to avail data analytics services.