One can count the swift evolution of fintech as the biggest disruptor of our times for financial institutions that has forced banks, insurers and asset management companies alike to face a new reality. Products, services and business models that had been working for decades are no longer an option today in the world of digitisation. This means that legacy infrastructure now needs to be replaced or augmented by newer, more efficient technologies.

In the recent global pandemic, the fintech sector experienced a rapid period of growth as digital financial services saw evolution across the board, especially in emerging markets. Today when almost everything has gone digital, be it the way we shop, how we interact or how we even bank, digital capabilities have now become mission-critical.

As fintech is now being viewed as a path to affordable financial services, the onus of economic growth and financial inclusion squarely lies on its shoulders. Especially since we are living in the age when physical interactions are now deemed to be risky, digital banking services and transactions seem the only viable way out.

Apart from the growth in adoption, there has also been an expansion in the number of services that are provided, with institutions launching new services of value addition and products. This phase of rapid expansion, in not only the usage of services but also the necessity of developing and launching newer digital services, has placed additional pressure on CIOs and other IT leaders especially in the following areas:

  • Innovation: While the fintech industry right now is at the precipice of a ‘disruption or be disrupted’ scenario, institutions now need to be able to develop and rollout products in a rapid manner
  • Transformation: A prerequisite for catering to the kind of innovation the fintech industry requires today, means bringing about a transformation. Having said that, however, one of the biggest challenges that CIOs have to continually face is that, only one-third of the transformation projects end up delivering the value that is expected out of them.
  • Regulatory Concerns: Since financial services continue to be one of the most highly regulated sectors, addressing how innovations can meet regulatory requirements, becomes essential for CIOs right now.
  • Community Education and Enhancing Customer Experience: Finally, IT leaders have to ensure that they are addressing community concerns that have arisen regarding the financial system in these tumultuous times, all the while being able to deliver enhanced customer experience.

Moving Forward Post-Pandemic:

The finance sector, as is the case with most industries, has experienced economic upheavals and changes in consumer behaviour since 2020. The ongoing market uncertainties and pivots are now ready to usher in an era of new fintech applications, advancements as well as ideas. This means that leveraging new technologies has become the need of the hour, which can help in achieving the following outcomes:

  • Tightening Workflows and Driving Self-Service Via Automation: Financial entities, have over time increasingly offered customers the opportunity of conducting almost all of their transactions online. Adding to this, technology will help in erasing friction points via new software and platforms.

Automation thus, offers a lot of positive aspects from various perspectives. From providing consumers with viable avenues to solve a lot of problems without human reliance to reducing customer service burdens on industry professionals, automation can even help in breaking pipeline bottlenecks such as loan agreements awaiting signatures, etc. Thus freeing workers from routine tasks to shortening conversion cycles and improving satisfaction levels for commission-based employees, automation can help with it all.

  • Biometrics and Enhanced Cybersecurity: Cybercrimes, have been proportionately on the rise with enhanced digital adoption. The proliferation of Blockchain technology has helped in reducing certain gaps, having said that however others do remain. Biometric solutions can help in taking care of these concerns. While the technology is still in its developmental stage, it is no doubt that biometric safety measures can help in providing contactless secure transactions. Acceptance of biometrics in a widespread manner can help in enhanced accuracy and accessibility, thus allaying security concerns.
  • The Rise of Alternative Lenders: According to Allied Market Research, peer-based lending will end up exceeding $550 billion by the year 2027. While traditionally people used to be on the lookout for classic lenders like a bank for loans like auto, home, etc.people are now willing to seek more attractive lending relationships. While regulation is a big concern for peer to peer lending, fintech is now moving ahead and removing obstacles to level the lending playing field and also fostering much more attractive terms.
  • Enhanced Financial Freedom for Consumers with Open Banking: Open banking, can help customers inn safely accessing their financial institutions for sharing information with select entities. This is really helpful for cross-referencing a person's financial data by a player within a certain ecosystem. Since there are personal capital programmes that have dipped their toes in the market of investment management, the demand has increased more.

Leveraging open banking can help in many ways, for example developing a mobile investment portfolio app, that can help users in gaining a snapshot of the finances. Analysing data gained from banks, credit card accounts, etc.with the help of predictive AI-driven software individualised recommendations could be given to customers.

For long, financial institutions have felt the pressure of both modernising the infrastructure and also responding to changing customer demands and expectations. The pandemic of course has accelerated this entire demand for digital transformation, which means there are added complex arrays of urgent issues that constantly vie for management attention and investment. As of now, fintech shows no signs of stagnancy and is a robust sector that is ripe for numerous exciting disruptions that can add value for customers and financial businesses and employees. With the proliferation of technology, there has arisen a great opportunity with respect to driving value for players, enhancing customer relationships, building upon capital resources and establishing a reputation. This means that CIOs and other IT leaders will now have to focus especially on innovation and transformation with the help of new wave technologies to deliver superior services to all.

About Author

Vineet, a BE from NSIT and MS in consultancy management from BITS Pilani, has over 25+years of experience in the Technology and IT industry. Vineet is currently the Global CTO & Country Head for Biz2X, a turnkey global SaaS platform that enables financial institutions to provide a customized online lending experience for their small and midsize business customers. He is a strategic leader with a proven track record of building technology led businesses and delivering digital transformation for large businesses. He has led businesses right from formulating business vision & strategies to building and commercializing products that have generated maximum ROI for stakeholders, customers and employees.

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