By Rohit Yadava, Chief Operating Officer, MSys Technologies
By developing, adopting, and implementing digital tools and technologies, the financial services sector can offer superior customer services while elevating its operational efficiency significantly.
With technology increasingly dominating the business landscape, the adoption of new-age tools has become a matter of strategic priority for the financial services sector. The industry stalwarts today acknowledge the importance of digital transformation although only a handful of firms have gone on to integrate technology in their functional procedures and operational mechanisms. Why so? Well, the adoption of technology in the financial services segment is not a straightforward procedure. Not only does it mandate fostering a culture of innovation but also a shift in leadership mindset from seeing technology as a cost to considering it as a strategic asset.
Investing in IT systems and allied capabilities can prove to be a game-changer for financial services organisations. By using real-time data collection, analytics, and some of the newer cutting-edge technologies, financial firms can significantly enhance customer satisfaction, operational efficiency, and overall profitability. So if you too are making up your mind, here is a complete list of newer digital technologies that can herald a transformative change in the domain of Financial Services:
a) Artificial Intelligence (AI) and Machine Learning (ML): AI and ML play crucial roles in automating processes, personalising communication, and enhancing the decision-making capabilities of financial services firms. While AI algorithms are being used to identify fraudulent activities proactively, ML is aiding lending activities by automatically assessing the risk profiles and creditworthiness of applicants. AI-enabled chatbots are also used to offer 24X7 support and by offering prompt query redressal, these bots are taking customer service to the next level.
b) Blockchain technology: Blockchain has been known worldwide for offering secure transaction mechanisms. This cutting-edge technology allows all participating stakeholders to make immutable transactions and track them in a completely transparent manner. It also plays a crucial role in eliminating fraud and by allowing disintermediation in the cross-border payment process, it brings down transaction costs and time significantly. Further, smart contracts based on the blockchain can be used to automatically execute contracts in trading, finance, and insurance segments, leading to enhanced systemic efficiency and reduced administrative overheads.
c) Cloud computing: By equipping organisations with the desired levels of flexibility and scale, cloud computing is rewriting the growth and innovation story in the financial services sector. Moving to the cloud also benefits firms in terms of leaner operations, and enhanced efficiency as well as reduced spending on infrastructure. Cloud technology also plays an important role in making the entire product development cycle agile and quick, thereby reducing the time-to-market for new financial products and services. Additionally, cloud technologies can help firms derive insights into consumer behaviour, emerging trends and optimise demand and supply for achieving superior results on the business front.
d) Robotic Process Automation (RPA): RPA plays a crucial role in freeing up valuable human resources to complete complex and value-added tasks. The technology is used in streamlining repetitive jobs. By automating tasks such as data collection, account analyses, and compliance reporting, RPA can aid firms in reducing human errors, elevating operational efficiency, and ensuring regulatory compliance. Further, financial firms can use RPA to process a vast amount of data and generate actionable information for further processing or implementation, as the case might be.
Way Forward
Adopting a holistic digital transformation strategy is the key to integrating technology in the financial services sector. While many steps can come in handy, the ones given below are significant for successfully embracing digital technologies:
- Developing a digital strategy: Defining the digital goals, assessing the firm’s current capabilities, and outlining a plan for achieving objectives are crucial prerequisites for successfully developing and implementing a digital transformation journey. Remember, the strategy for digitally transforming the firm must align with the business’s overall vision and customers’ expectations as any variance might not yield desired results.
- Investing in talent: Having a well-equipped workforce that not only understands digital transformation but is also adept in integrating technology tools across functional and operational mechanisms. To that end, financial firms must invest in hiring fresh talent in the fields of AI, ML, blockchain and RPA while conducting upskilling/reskilling training programs for their existing employees.
- Collaboration with fintech: The coming together of financial firms and FinTechs can yield significant superior results for the sector. Fintech companies are way ahead in the adoption, integration, and implementation of technology tools and by striking collaborations with these firms, banks and financial institutions can significantly leverage their expertise and become more agile, responsive, and resilient in business processes.
- Customer-centricity: Like any other strategic initiative, the customer must be at the heart of the digital transformation approach in the financial services sector. Banks can use data analytics to garner insights into customer behaviour and accordingly, offer superior customer experience to the target market. Similarly, multiple digital channels can be utilised to reach the customer and by productively engaging with prospective buyers, financial firms can significantly benefit on the both growth and profitability fronts.
Digital transformation is the need of the hour and by embracing AI, ML, blockchain, and RPA, financial firms can achieve higher operational efficiency, superior service delivery, and enhanced customer satisfaction. The adoption of technology also proves beneficial for the overall growth and profitability of the financial sector. However, the successful adoption of technology in financial services is dependent on developing and implementing a comprehensive digital transformation strategy. Along with a strategy, financial firms also need to focus on hiring new talent, upgrading the existing workforce, collaborating with FinTechs, and adopting customer orientation to make the most of the technology tools. Financial firms’ ability to innovate and implement new-age technologies will prove a critical factor in ensuring their long-term business success and sustainability.
