Around 90% of decision-makers in financial services believe that digital technologies are disrupting their industry. Many of its actors refer to digital finance transformation as an inevitable development stage. But what is digital transformation in finances?
In brief, it’s the use of digital technologies for creating new operational processes, business culture, and customer experience. Contrarily to digital transition, which is mostly about storing critical data in digital format, digital transformation changes the enterprise at many levels. It often modifies the way the organization does its business. For example, in the financial sector, digital transformation affects businesses by introducing new asset management platforms, forecasting applications, analytical tools, and other fintech software solutions. Customer experience is also re-shaped completely with the appearance of neobanks, financial self-service portals, and fintech payment solutions.
Why is digital finance transformation getting so popular nowadays? Well, there are many reasons making it attractive for businesses.
Check our new material to know the six most valuable reasons inspiring companies to embrace digital transformation in finance .
Fintech: A Brief Overview
Before we dive into the benefits of digital transformation in financial services, let’s briefly discuss financial technologies. In our article, we will primarily focus on the adoption of fintech solutions as the most common form of digital transformation in finance. Hence, it’s important to clarify how these revolutionary apps look.
The main types of fintech apps driving digital transformation in financial services include:
- RegTech software that helps businesses navigate the regulations;
- Analytical platforms that make complex calculations and revenue forecasts;
- Blockchain and cryptocurrency apps allowing financial companies to trade cryptocurrencies;
- Investment and stock-trading apps that provide investors with intuitive asset recommendations;
- Insurance platforms focused on managing and automating insurance payments;
- Digital payment systems that are widely applied for secure transactions;
- Crowdfunding apps helping organizations to raise money on specific initiatives;
- Personal platforms providing digital finance services that help individuals or organizations manage their finances;
- Lending platforms that automate diverse types of lending and help manage loans.
Fintech apps are the future of digital financial services. Such software increases business efficiency and improves customer experience, which makes more and more companies use it. Check some stats on industry trends and attitudes that prove it.
In sum, digital transformation in financial services becomes a must for industry actors that want to stay competitive but also expect that all companies adhere to mobile banking compliance requirements . If the provided stats are not convincing enough, check the next chapter to learn top financial companies’ reasons for digital transformation.
Six Reasons for Digital Transformation: Why the Financial Sector Adopts Innovations
Digital transformation in financial services brings businesses many benefits. Here are the most valuable ones.
Enhanced Process Automation
Fintech software allows saving both your and your clients’ time. Such apps increase efficiency by automating many routine processes, such as documentation and calculations. Many companies also adopt integrated chatbots in financial services. These tools automate basic communication with clients. Others additionally integrate feedback management functions into their websites or customer service apps. Such tools collect the information that helps organizations improve their services and tailor the customer approach to client needs.
Whether you need to provide your clients with complex financial calculations or just want to research user preferences, analytics is a must. Digital solutions help you make analytics much more efficient, accurate, and convenient.
Financial organizations implement financial data management platforms to save data analysts’ time. Such apps help them label and structure all the information, which is laborious if done manually.
Fintech analytics solutions also include AI-driven risk assessment tools that provide accurate forecasts and help detect business threats. Using apps for fraud prevention measures is another analytics solution encouraging organizations to invest in digital transformation. Such software products may range from mere scanners detecting false documents to sophisticated digital systems that review and validate financial data.
You cannot ensure top-notch safety of finance software without tech innovations. Cyberattacks become more sophisticated day by day, while the loss of confidential financial data leads to significant financial and legal issues.
Fintech solutions allow you to fortify transactions and all vulnerable information. One way to ensure top-notch security is the adoption of blockchain in financial services. It means that all the essential financial data, including transaction records, is stored in separate blocks that form a chain. Hence, it is impossible to retrieve the information from a specific block without changing the entire chain, which shall be immediately detected.
Optimized Resource Management
When providing financial services, you have to rely on diverse resources, such as financial data, official documentation, and reports. Without cloud computing in financial services, you won’t manage to properly connect them. Cloud-based data management platforms help store and structure all the essential information and share it between teams. Cloud computing is also a great basis to scale and adopt new solutions in the future.
Besides, many financial companies operate with physical resources, for example, computer equipment or printed documents. Storage management platforms allow tracking such resources’ location and control their usage. This gives the financial organizations better control over their businesses and prepares them for further digitization.
Even though some companies from the financial services industry avoid expensive innovations,fintech apps are very likely to pay off in short terms. For example, companies with higher digital maturity reported 45% revenue growth compared to 15% for lower maturity companies. Increased profitability is a powerful driver of digital transformation. By improving business efficiency and quality of services, Fintech solutions can take the organization to a new level.
Check more specific examples of how Fintech financial services software makes your business more cost-efficient below.
Improved Customer Experience
Around 51% of clients in the financial sector state that poor user experience is where most financial service providers fail. Hence, to engage and keep customers, top financial software companies focus on building a customer-centric experience through software. When it comes to fintech solutions, the key point is to make them as convenient for the users as possible.
For example, you can apply sophisticated IoT data networks that can be accessed from client’s personal devices. Such solutions enable the users to easily access relevant data stored in their fintech app accounts. Convenient smartphone applications also help clients conduct fast transactions, make instant calculations, or request financial services in a few clicks. Many of them also have integrated chat functions that allow fintech organizations to constantly stay in touch with the clients. This helps understand their requirements much better and, thus, provide better service quality.
Final Thoughts on Digital Transformation in Finance
As you see, digital transformation can make financial service businesses much more efficient and profitable. Unfortunately, developing fintech platforms, which are the core of digital innovation in financial services, is not the easiest job. You must show much technical expertise to deliver a quality product .
What is the solution? The best choice is to rely on experts and outsource digital finance transformation to an experienced technology partner.
Binariks is your helping hand that is always ready to facilitate your plans. We are experts in delivering highly scalable and secure apps to financial software companies. Check our portfolio to know more about our experience.
Do not hesitate to contact us to discuss your needs. Let’s develop fintech software solutions that make the difference.