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What are The Newest Digital Solutions For the Financial Industry?

In the course of digitisation, a worldwide revolution is taking place in the financial sectors

in both highly developed Western countries and in developing countries. Accessibility to banking services and higher personalisation in personal finance products are two of the top leading trends that surround the new digitalisation wave. Since the pandemic’s first outbreak, humankind has devoted its attention to developing sustainable digital solutions for the financial industry.

Working in a bespoke software development company with a focus on developing solutions for financial sectors and businesses, I find it inspiring that today’s society is going through a multi-level digital transformation. Currently, technological advancements allow the BFSI (banking, financial services and insurance) sector to focus on understanding the behaviour, preferences and choices of digital consumers and to deliver targeted solutions that solve impending market problems.

The Rise of FinTech Companies

For several years now, bank customers have experienced that the entire industry is in a state of upheaval. Up until the last couple of years, the established traditional banking institutions have always been the ones to set the tone of direction. But in many areas, they are now cumbersome and no longer up-to-date. This is because modern FinTech companies disrupt traditional structures and introduce completely new products to markets and even create brand new industry segments such as crypto trading, NFT purchases or fully digital virtual worlds.

In addition to online banking, which is now an established service in most banks today, there are a few other segments that have changed significantly due to digitization or are in the process of changing. For a long time, bank customers have stopped going to their bank advisor when they need a loan. Today, loan applications, lending and disbursements have switched to digital-only service delivery, which boosts convenience, processing speed and the overall consumer journey.

E-Signature

What exactly is an electronic signature? Nothing else than a digital data record based on appropriate security of identity verification, which allows for a permanent link to an electronic file ensuring visibility and clarity, e.g. our will to conclude a specific contract. according to the EU regulations, there are three types of electronic signatures: simple, advanced and qualified. The qualified e-signature has the highest security level and is the legal equivalent of a signature on paper.

Among the benefits of e-signatures are:

1) Increasing the competitive advantage of companies and boosting the possibility of effective operation on the European digital market based on electronic legal transactions;

2) Effective document management - complete elimination of paper in business and management processes.

3) Speeding up the signing process - hundreds of documents in seconds at any time and place, without the need to initialize each page;

4) Saving time and money - using the e-signature service enables automation and acceleration of business and management processes.

Digital Credits

After the initial hesitation of many banks towards adopting and implementing digital solutions, many providers are now trying to catch up with innovators. FinTech companies have had a lot of success with their concepts and services, which is proven by the number of customers and positive reviews. Just as a quick example, the UK startup Revolut is just 6 years old but already offers personal financial services such as digital credits, loans, crypto and commodity investments to its more than 1 million active users.

Many more providers offer similar digital solutions for the financial industry and has made the application process for a loan incredibly easy. There are now B2B (e.g. Klarna, Brex or Credibly) and B2C (e.g. Crif, Checkout.com or Monzo) providers where each step of the way is fully digital, ultimately accelerating the application and confirmation processes.

AI and ML

You’ve probably heard of artificial intelligence (AI) and machine learning (ML) and have at least an idea of what their capabilities and potential use cases for the financial industry can be. On the one hand, AI can roughly be described as is the simulation of human intelligence processes using machines and computer systems. On the other hand, ML is a process that uses an algorithm to analyze data, learn from the data and make a statement or prediction about it. Together, they can transform the world as know it and specifically the financial sector.

Most FinTech companies already design AI and ML-based digital solutions, but their importance is expected to grow further in the next years. Some of the most widespread use cases of AI and ML include fraud detection, personal money management, tailored advertising, exact credit scoring or website chatbots, tailor-made deals, and website chatbots. In the future, AI and ML are expected to grow increasingly smarter and, as a result, deliver more value. Among the long-term goals of these technologies applied to financial companies include process automation, quicker financial service delivery, and accessible financial support.

NFTs

If something can be described as an absolute hype, currently the first price definitely goes to NFTs. Non-Fungible Tokens, or shortly NFTs, use Etherium-blockchain technology which works similarly to a log book to record all information about digital transactions. What categorises NFTs is that they have non-exchangeable value, meaning that an NFT is in contrast to an exchangeable value, such as a currency - each NFT is unique and cannot be replaced by any other item.

Many financial experts, as discussed in this Forbes article, fear the disruptive potential of NFTs for the financial industry. Despite the fact that nowadays NFTs are primarily associated with purchasing digital artwork, the future use cases of this technology are limitless and vary from healthcare (NFT-based health records) and digital marketing to safer online payments and investment opportunities. Industry insiders predict that NFTs will have a strong impact on DLT or digital ledger technology which is already behind syndicated lending, trading finance and foreign exchange. Most probably, NFTs will help substantially reduce operational costs while simultaneously also reducing the time necessary for various financial operations.

Author Biography Aleksandrina Vasileva

Aleksandrina is a Content Creator at Dreamix, a custom software development company, and is keen оn innovative technological solutions with a positive impact on our world. Her teaching background, mixed with interests in psychology, drives her to share knowledge. She is an avid reader and an enthusiastic blogger, always looking for the next inspiration.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes

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