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Digital transformation has transformed almost every industry, including fintech. Digital technologies have revolutionized this sector’s approach to customer experience while making it technologically relevant.
Financial organizations offering their services digitally can more efficiently deliver the experiences their stakeholders and end-users expect, as well as experience an increase in employee satisfaction, customer engagement, and business innovation. FinTech services may also work faster and more efficiently to better compete in the marketplace.
In this article, we’ll discuss how digital transformation is rapidly altering the custom finance software solutions and redefining customer experience through its numerous advantages. So, let’s get underway!
Impact of Digital Transformation on the FinTech Industry
Digitization and modernization in FinTech are interrelated, with one often driving the other forward. Digital FinTech has dramatically transformed financial services, creating space for innovation from multiple providers within this space.
FinTech companies have pioneered numerous innovations within the financial services sector, from mobile payments and peer-to-peer lending systems to blockchain technology and robo-advisors. Furthermore, data analytics and artificial intelligence (AI) technologies have advanced tremendously through digital transformation, altering this process significantly.
FinTech businesses leverage these technologies to detect fraud, assess credit risk more accurately, and offer personalized financial advice to their clients. Their data-driven insights give FinTech pioneers an edge and help increase consumer adoption more rapidly.
Here is a breakdown of how digital transformation has affected FinTech:
Impact 1: Reducing Complexities
Today’s financial services industry has become too competitive to survive without simplifying processes online while making them extremely secure and effective. Financial services’ shift towards digital media has had an immense effect on this effort; one key benefit is that it reduces complexity by making processes more approachable for users.
FinTech products and services with multiple features may offer improved user experiences, automated processes, and other tasks to streamline financial industry operations. As such, the financial industry must undergo a digital revolution, and top-tier enterprise software development services providers can help provide digital transformation solutions to FinTech companies as well as other financial organizations.
Impact 2: Increased Financing Flexibility
Legacy systems still need to be more productive today due to their inability to measure all essential lending variables accurately; as a result, SME lenders rely heavily on traditional lending services that require revenue-generating revenue streams from conventional loan arrangements that tend to be costly and inflexible compared to FinTech development solutions.
FinTech apps leverage cloud technology for its ease of integration with asset systems, creating a user-friendly digital model to increase flexibility within lending solutions.
Impact 3: Expanding Business Versatility
Over the past decade, businesses have already faced several major financial crises. Companies have expanded their agility in response to these events, and this trend has become an essential market trend. The economic sector and business entities need quick access to developing information volumes without engaging in time-consuming manual processes – digital transformation strategies provide them with this flexibility and can enhance agility as time progresses.
Impact 4: FinTech Growth in New Sectors
Digital transformation within FinTech has opened up new markets. FinTech services are expanding to reach more customers and businesses by offering various digital services – such as advanced online lending platforms – that connect them directly.
Due to competitive pressures, more than 50% of banks have adopted FinTech services within three years – contributing significantly to its rapid expansion as more people embrace its benefits and take advantage of FinTech solutions.
Impact 5: Leveraging Big Data to Foster Innovation
Utilizing big data has become an effective trend in the finance industry recently. Through digital transformation in the banking industry, banks are using innovative ideas for selling their products while also taking advantage of the personalization of user services with mass data analysis.
FinTech companies leverage customer data to enhance machine learning algorithms that reduce labor costs through automation in finance. By 2027, the global machine-learning market will reach USD 117 billion.
Impact 6: Adopting RPA to Achieve Seamless Operations
Financial companies strive to cut costs while simultaneously improving productivity and investment returns. RPA (Robotic Process Automation) comes to their aid by improving efficiency and productivity. By automating routine processes within financial services, RPA removes repetitive work from bank employees that was once done manually by them – saving both money and effort!
Reducing errors and inadequacies is another benefit. According to one recent study, over 80% of FinTech companies have adopted this automation process for a seamless banking experience.
Impact 7: Increased Risk Assessment
Artificial intelligence, blockchain technologies, and data analytics can provide more accurate and quicker due diligence processes, helping organizations implement digital transformation more easily and improve risk evaluation for various financial transactions, including loan disbursement. By employing FinTech services that use these capabilities, they can enhance risk evaluation while offering additional security on financial transactions – one of the top digital transformation trends for Fintech services today.
Top Fintech Industry Digital Transformation Trends
Below are a few fintech developments that are revolutionizing the finance industry:
Trend 1: Enhancing Business Agility
After learning from the 2008 financial crisis, organizations’ ability to increase agility has emerged as a significant industry trend. Financial businesses require timely, dependable access to expanding volumes of data without time-consuming manual work procedures to foster continuous advancement and development – essential elements for agility.
Trend 2: Rise in Mobile Banking
Customers have responded to the global pandemic by adopting mobile services more heavily, expediting the banking industry’s transition towards digital finance. While mobile banking itself isn’t new, when Fidelity National Information Services (FIS) implemented its lockdown in April 2020, there was an extraordinary 200% surge in registrations. Additionally, mobile traffic increased 85% year over year, making banks all the more in need of digitization.
Due to our increasingly smartphone-reliant daily lives, digital banking services such as fast transfers, shared payments, and electronic bill payments have become more widely accepted among us. According to Deloitte’s findings, 72% of individuals now use their phone to reach their primary bank.
Trend 3: Leveraging Big Data to Foster Creativity
Banks and financial institutions have already seen the promise of big data analytics’ potential within their industries, creating innovative methods of selling their products while taking advantage of big data to provide personalized services to clients. Fintech firms will take full advantage of large customer data pools by training machine learning (ML) algorithms, which automate procedures, thereby saving staff hours of labor costs.
Trend 4: Pay Utilities on Mobile
Ten years ago, mobile wallets were an unfamiliar concept for most. Over time, however, their use has evolved with money storage and transfer processes becoming more convenient and accessible through mobile payments than cash or cheque payments; businesses, shopping centers, and vendors all prefer these digital forms of charges due to convenience, security, and accessibility provided by them – creating a path towards digital development in the banking industry.
Trend 5: Automating Operations With RPA
Financial institutions are under tremendous pressure to reduce costs, increase returns on investments, and boost productivity. RPA has already proven its worth as an efficient solution that enables production across the board while simultaneously creating greater efficiencies.
RPA helps organizations by automating repetitive office processes traditionally carried out by bank employees and reducing mistakes and inefficiency, according to Gartner research. An impressive 80% of financial leaders have adopted RPA or plan on doing so soon. Therefore, RPA is an integral component in digitizing banking industry processes.
Conclusion
We hope that this article has provided useful insight into digital transformation initiatives within the fintech sector. Digitalization plays a significant role in its expansion and growth, while FinTech app development services significantly impact financial services organizations.
Digitalization is necessary for businesses in today’s marketplace to offer superior service to clients while at the same time increasing scalability and user experience.
Should you wish to embark on or continue with your digital transformation journey, our experts offer top-tier digital transformation services. They will guide you throughout the entire process of the digital transformation journey.
