By Mr. Praveen Paulose, MD & CEO of Celusion Technologies

The rapid pace of technological change is becoming the most innovative force in the financial services ecosystem today. BFSI (Banking, Financial Services, and Insurance) has gradually adapted to the post-crisis regulatory framework, and business models have adjusted accordingly. 

BFSI (Banking, Financial Services, and Insurance) have resorted to advanced technology to enhance efficiency and assist game-changing innovative solutions while reducing costs and aiding legacy systems. Innovative technology makes it possible for niche financial services providers to reach their target client base and be financially viable.

State-of-the-art technologies are transforming financial services like payments, lending, insurance, and wealth management to make them more diverse, competitive, efficient, and inclusive. New business models are redefining market dynamics with innovative solutions built from the ground up and free from legacy systems. BFSI (Banking, financial services, and insurance) have begun to adopt advanced technologies that will transform their ability to amass and analyze information. Since the modern generation of customers demands better service, seamless experiences, and more excellent value from their purchases, regardless of the channel.

Mr. Praveen Paulose


The technological forces that are assisting BFSI players to save money and resources include:

Peer-to-peer transactions:

Financial enterprises that manage and initiate financial transactions from end to end put their capital at risk, thereby creating financial risks. With the evolution of peer-to-peer transactions powered by advanced technology, financial institutions may gradually play the role of an intermediary, as a minor stakeholder, or simply as a node in a network. Through the sharing economy, financial entities can utilize the advanced technology to find effective matches between capital providers and users rather than relying on banks as intermediaries.

Financial companies should strongly consider partnering with digital intermediaries or even end-users to tap into the sharing economy to deliver services at a much lower price. As in the current scenario, with the accessibility of technology, modern clients are drifting toward more economical fees, convenience, and ease of use. For example, peer-to-peer transactions are being utilized by 90% of the adult population in Kenya to manage deposits and payments.

Evolution of the digital wallet:

Digital wallets driven by technology allow consumers to send, store, and use money online securely, fast, and cost-effective. In addition to being a valuable service, it serves as a doorway into many lucrative bank services. The tap-and-pay mobile payment method provides young customers with a faster and easier user experience than typical plastic card transactions. Digital wallets are being adopted most widely by millennials. The current generation of consumers increasingly connects core transactional services with technology and new brands, which are not historically associated with financial assistance. India's digital wallet transactions were estimated to be worth 36.5 trillion rupees in 2020.

Customer intelligence:

Customer intelligence is the most critical factor to predict revenue growth and profitability. Technology advances have enabled financial companies to access exponential data to predict and analyze customer behaviour and patterns. By analyzing available data, financial institutions can offer the right offer to millennials at the right time when new opportunities open up. With hyper-connectivity, asset management will become more customizable. Big data analytics, sensor technology, and communication networks will enable financial enterprises to predict risks and customer demands more accurately than before. Several benefits would result, including sharper pricing and customer targeting and a change from reactive claims payer to proactive risk advisor.

Customization:

The benefits of digital commerce, such as speed and personalization, have shaped customers' expectations regarding financial services. Customers do not want generic mortgages, insurance policies, or investment plans; they want solutions that are customized, adaptive, and meet specific needs. For example, target-date investing automatically adjusts asset allocation based on the user's expected retirement age. The availability of advanced technology extends the accessibility of customized service and tailored solutions to mass consumers, and beyond that, earlier were only offered to high-profile clients. Financial enterprises have started adapting to AI-based client advisors for more customized solutions. Industries are using AI engines, pre-programmed with client manuals, past call histories, policy and procedure guidelines, and more to provide context-based service to the clients

Predictive analysis:

With the introduction of advanced algorithmic trading systems, financial companies are becoming better at predicting and responding to emerging trends. Financial services are addressing key pressure points, lessening costs, and alleviating risks with robotics and artificial intelligence. Artificial intelligence will play a significant role in fund design, including approving trades and dealing with investors. The banking sector uses AI to detect payments fraud and identify unusual behaviour of the client to combat market abuse and rogue trading by analyzing the past and forecasting customers' spending behaviour and location data from their smartphones and wearables.

Financial institutions are facing many challenges right now, including competition from new sources, demographic shifts, rising customer expectations, and a host of new regulations. By utilizing technology, financial institutions can reduce costs and enhance their operations.
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