At the start of the coronavirus pandemic, nobody could have predicted the impact COVID-19 would have on the business world. As we approach Christmas 2021, it is clear that COVID-19 has been damaging to many business sectors. But for the financial sector, it’s a different story. For financial institutions, the pandemic has presented opportunities to digitise services and introduce new technology.
In 2021, Visma | Onguard’s Fintech Barometer found that 35% of businesses planned to introduce digital transformation measures within the next year. And as we move closer to 2022, even more businesses plan to put in place digital transformation strategies to ensure they can keep up with customer demands.
Read on to discover some of the fintech features expected to be popular in the coming months.
Artificial Intelligence (AI)
Digital expansion in finance relies on cutting-edge technology, with AI playing a key role.
In finance, AI can be used to reduce operational expenses, improve revenue generation and automate time-consuming manual processes, from data collection to credit scoring.
Put simply, it allows finance professionals to spend more time on tasks that bring value to the business, improving productivity and helping to boost staff morale.
Data is increasingly important in business strategy, with 38% of organisations saying they use data to support company processes during 2021.
Further, 44% of organisations cited an increased requirement for data analysis in 2021. And it’s easy to see why: used effectively, high quality data can help to drive insight, steer the business towards achieving its objectives and bring new ideas and strategies to fruition.
By using a combination of AI and data analytics, organisations can easily sift through data to find the information they need.
Blockchain allows businesses to share data between multiple points of authority in a database. In addition, information can be inputted to multiple devices within a network.
Out of the top 100 companies, 81 organisations are already using blockchain, or have developed a plan to implement its use in the near future.
This is significant because organisations using blockchain won’t have to retain separate accounts. This could potentially end the need for purchase orders and invoices.
In credit management, blockchain can be used to create smart contracts, allowing simpler, more transparent transactions.
As well as new technology, the shifting mindsets of finance professionals plays a major role here. In 2019, 23% of finance professionals said they were resistant to change – but by 2021, that figure had dropped to 15%.
This is significant – in order for new technology to be embraced and utilised, finance professionals must be on board and willing to embrace new ideas and work solutions.
Capitalising on opportunities
As we begin to adjust to the ‘new normal’, it’s time to start capitalising on the opportunities that have arisen post-pandemic.
What can be learned from having access to this additional data? And how can this fresh insight be used to gain competitive advantage?
Lion & Mason can help you create a detailed picture of your customers preferences, motivations and challenges, allowing you to decide which opportunities to act on.
Digital management of finances
Thanks to social distancing measures, many consumers now choose to manage their finances online or via a mobile device. 80% of people in the UK use some form of online banking, and just over 12% have switched to a digital-only bank. Internet banking will continue to grow, with more financial transactions expected to be conducted via digital channels. Fintechs will use data on customer usage and preferences to drive improvements and make the case for new digital features.
The Internet of Things (IoT)
The Internet of Things (IoT) is another key area. It covers technology such as smart home devices, connected cars and wearable fitness trackers. In connected cars, drivers can make contactless payments without having to handle cash or touch potentially infected services. Activating features where customers can pay for fuel or food without having to leave the car makes life easier and reduces the risk of coronavirus transmission.
People working in the gig economy have unpredictable and inconsistent work patterns, which has an impact on their financial situation. This section of the workforce is often underserved by the major banks, making it a popular target for fintech companies.
Many industries have struggled due to the impact of coronavirus. But for the finance sector, an acceleration in the need for digital practices has brought about positive changes.
One US study identified that 88% of participants were using technology to manage their finances, meaning that fintech initiatives were being used more widely than social media. (72% of participants said they used social media platforms such as Twitter, Facebook or Instagram.)
Digital strategy and transformation is expected to remain a key business priority in the financial services sector. With this in mind, there has never been a better time to start thinking about your own digital transformation strategy.
Product development is key to digital strategy. If you want to gain competitive advantage, our practitioners are on hand to help. There’s no sales pitch and no pressure – we just provide helpful information to help you get started. Our expertise enables us to create innovative digital solutions, from initial proposition to fully fledged product. We’ve worked with industry leaders including Allianz and Johnson & Johnson, although we work with companies of all sizes.
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