The evolution of technology is disrupting and redefining every sector as we know it. The finance sector is no exception. In just a few years, we have seen new forms of currency, banking, financial services and expansion that previously were not possible.
One example of expansion, writes TechFunnel’s Marco Islas, “is the exponential growth of Ant Financial, the digital payments arm of the China-based tech company, Alibaba, who gained 100 million new customers in 2016 to reach a total of 500 million customers, matching the customer base of some of the world’s biggest banks.”
Technology has also enabled financial institutions to not only improve their services but also to foster better relationships with customers. A few trends that were predicted to redefine finance this year (2019) included changing customer demands, an evolving workforce, blockchain technology, smarter/faster finance, and more responsibility. As trends continue to change the finance sector, it’s important for advisors and workers to keep up with all things new.
Top emerging trends for financial institutions
Read on for five top emerging finance technology trends you need to know.
1. Personalization that goes above and beyond
Financial customers are becoming more specific and savvier regarding their money. They want a personalized experience that will give them non-generic recommendations of what their next steps should be money-wise. When shopping for a product or service or when preparing to make a major investment, they want clear advice from their institution or advisor as to what direction they should take. Consumers want to feel like their financial goals have been listened to and their financial activities are being learned from.
For financial institutions to know, understand and fully look out for their customers, rich data and artificial intelligence can help them to build end-to-end-personalization. Jim Marous, co-publisher of The Financial Brand and owner/publisher of The Digital Banking Report, writes: “With artificial intelligence (AI), there is the potential to transform customer experiences and establish entirely new business models in banking. To achieve the highest level of results, there needs to be a collaboration between humans and machines that will provide a humanized experience that is different for each customer.”
2. Mega mobile
Mobile apps, mobile pay, mobile banking … our smartphones have literally brought banking to our fingertips. Think about it: When was the last time you walked into an actual bank? We can now deposit checks, transfer money, pay bills, and apply for loans all from our mobile devices. This means that financial institutions will need to place less focus on their brick and mortar and more focus on their mobile features. Customers expect their banking apps to be 24/7, fast, easy-to-use and glitch-free, requiring little to no human interaction.
When it comes to apps, financial institutions will additionally need to ensure that they are able to sync with other third-party financial service providers such as lenders, financial managers, and financial budgeting services. Daniel Newman writes that banks “will need to consider how they integrate with these third-party services — what information to offer, which companies they’re willing to partner with, and which of the services they may be able to offer to their customers directly — eliminating the middle-man altogether.”
And it isn’t just financial institutions that need to ensure their mobile game is on point. Restaurants, retailers and other brick-and-mortar places of business will need to make sure they are set up to receive mobile orders and mobile pay. As an example, Newman shares of how Honda has introduced mobile pay options gas via their own car dashboards.
3. Blockchain will keep making waves
It isn’t clear yet if blockchain will take over banking in the finance industry, but it has been making waves for a while and is likely to continue doing so. Even if blockchain doesn’t take over, it will certainly improve it by creating a transactional system that is smoother and less prone to fraud. Blockchain is set to impact the finance sector faster than other sectors because there are no radical transformations that need to take place for adopting blockchain technology.
According to a recent PWC report, 77 percent of financial institutions are expected to adopt blockchain technology as part of an in-production system or process by 2020. Marcell Gogan of Torque Magazine writes, “Blockchain technology will allow banks to reduce excessive bureaucracy, conduct faster transactions at lower costs, and improve its secrecy.” Additionally, he writes, “Blockchain can be used for launching new cryptocurrencies that will be regulated or influenced by monetary policy.”
4. Big and small will come together
As large financial institutions seek new ways to innovate and small financial start-ups work to grow, collaborations between the two will become common. Mastercard’s Start Path is a good example of this. The company launched it as a global effort to support later-stage companies who are reimagining the future of commerce.
According to CNBC: Mastercard’s Start Path works directly with later-stage start-ups and brings them through a core six-month program to enable them to scale. The program has already helped some stellar products — smartphones converted to secure contactless payment terminals from Mobeewave, a bank in your pocket for online payments with Revolut, and payments within social networks from PayKey.
Expect more big banks to come together with small start-ups that are bringing innovative ideas to the financial sector.
5. Payment processing will speed up
Many banks are currently working to speed up customers’ paying experiences. Apart from mobile pay, another way to do this is with contactless cards that allow customers to tap the plastic at the point of sale, rather than inserting a chip or swiping. This is a process, of course, but one that is almost there.
Linda Kirkpatrick, executive vice president of merchants and acceptance at Mastercard Inc., says, “We’re professing the benefits of contactless payments to our financial institution customer base and our merchants. Getting a market to move is a Herculean effort, but I do think we’re there. This is it. This is the inflection point we’ve been waiting for.”