With the rise of multiple fintech startups and continued shifting customer preferences for digital banking, financial services businesses have endured many changes over the last few years.
Shifting to automated, data-driven processes is the most effective solution for businesses to manage disruption and harness new opportunities. As customers have increasingly moved to online services, the number of physical branches has declined by over 900 annually for the last decade. If this trend continues, some professionals believe branches could disappear by 2034. There is an opportunity in this transformative landscape. Conventional banks can apply digital solutions to gain customer insights and use real-time analytics to enhance and accelerate available services. Open banking allows financial institutions to efficiently share data with other groups via APIs to improve the customer experience. For example, in countries overseas, your bank can allocate discounts or extend credit because they’ve opened up a dialogue within an ecosystem. This concept enhances the value banks can offer customers and strengthens their position to provide new services to their customers.
Automation is initially costly and time-consuming, but some critical challenges impacting financial reporting and measurement relate to missing documentation and errors due to missing documents. Adopting digital technology reduces errors and dramatically reduces the time to complete financial processes.
Digitally managed risk
Risk management is a top priority for all financial services businesses. Analytics, supported by machine learning, enables business leaders to manage risk based on multiple variables, many of which necessarily aren’t clear. For example, climate change will significantly impact the success of many projects worldwide and the potential of borrowers to repay loans. Finance companies must consider all of these challenges in their financial plans. The ability to forecast and determine the impacts of climate change could become a vital factor in future success.
Security and regulatory challenges are also significant to financial services businesses. Harnessing data analysis and support by ML can improve fraud detection and enable necessary changes to improve overall customer satisfaction. A singular data platform provides one platform for all customer data and regulatory reporting.
The combination of real-time analysis and assessing historical data can determine anomalies that suggest potential data breaches. Data and analytics are essential for both data security and physical security. Deloitte has predicted that retail banks can decrease processing expenses by up to 25% and reduce records management costs by a further 70% by eliminating paper. There is still significant space for digital solutions in financial services.