Digital Transformation in Financial Services: Trends to Watch
For financial services, the adaptation of business processes to include technology is nothing new. The advent of the computer revolutionised the financial industry, making it one of the early adopters of a completely digital lifestyle.
But the financial sector’s inclusion of new technology did not stop at merely introducing digital systems to improve operational practice as a one-time deal. As technology develops and moves forward, so too are financial services pushing to stay on the cutting edge of what’s available.
Reports highlight that 90% of businesses in the financial sector place significant weight on the deployment of a digital transformation strategy. They cite the development of their technology platforms as the key to remaining competitive.
But what does digital transformation in financial services look like now? We’re looking at the top trends currently captivating the industry:
Manual financial processing is incredibly labour-intensive. The sheer quantity of information needed to file financial documentation is staggering and, in many instances, requires regular updates and amendments. Then you have the added tasks of data requests, consumer correspondence and monitoring.
In the financial sector, automation is becoming the cornerstone of all digital transformation strategies. The idea is fundamentally simple. Software now exists that enables administrative tasks to be carried out without human intervention.
Data management platforms, such as consumer databases, can be linked to consumer-facing products like mobile apps and websites, which allow users to input data themselves without requiring an employee to act as an intermediary. You don’t need a team member on the phone filing out all the customer data themselves, nor do you need to have customers come in-branch to set up financial accounts or services. They type their name and details into the app, which relays the information to your database, where it is stored for later use.
Automation also ensures no data is missed, through inputs like manual fields, and that human error is removed when it comes to logging the information.
An example of this is Logican’s claims management software.
The software can automate consumer onboarding, file all personal data and data relating to their financial claims. The systems will make requests for new information if needed, follow up on any missing information and relay information about updates in their financial claim management cases to the consumer. All of this happens without input from a business team member, beyond the initial software setup phase.
Automation like this has the potential to save huge amounts of time and energy for financial services, helping them to funnel their resources into other areas of the business.
Many in the finance industry tout AI as the holy grail of digital transformation. It’s not hard to see why. Artificial intelligence has wide-reaching implications for the finance sector.
The principle use of AI in finance revolves around the ability of computer software to understand and interpret the massive amounts of financial data that businesses collect. This ability allows firms to make choices using more detailed information than could be gathered manually — and at a much faster rate.
For example, AI can be deployed in finance to monitor investment opportunities, risk assess clients and partners and analyse borrowers’ credit data to secure the best possible leads. In lending companies, AI reduces losses by up to 23%. The software can find patterns in financial data outlining high-quality opportunities, and spot warning signs that suggest when agreements should be avoided.
Another way in which AI has proven effective for financial services is in the personalisation of customer accounts. Again, through data analysis, AI can monitor and interpret behaviours of business consumers — such as spending patterns on a current account. Through this data, AI can offer personalisation of services to best suit the customer’s needs. In the example of a current account, the AI may notice habits that indicate a different spending or savings account could provide the consumer with more benefits. This can be a powerful tool for upsells and client retention.
Chatbots are a form of AI, but they’re so specific we’re considering them in their own right as a form of digital transformation technology.
Financial services often cater to a broad market of consumers and can have consumer bases of millions strong. In these situations, communication is complicated and expensive. Customers demand excellent service, particularly when their money is involved, but this kind of dedicated client platform is difficult to manage at scale.
Chatbots are starting to provide a solution.
Chatbots are AI systems that provide answers to text-based questions based on an ever-increasing database of responses. Machine learning allows them to adapt to problems and give better and better responses as time goes on. It’s for this reason that chatbots — which have been around for years — are finally becoming a valuable form of digital transformation technology.
For example, customers can ask the chatbot when their next payment is due and the chatbot can give them an accurate answer. The benefit of this digital technology for financial services is that it removes pressure from live customer service agents, as chatbots can handle simple queries. This frees up phone staff and technical support teams to deal with more serious and urgent correspondence, which in turn improves customer service.
There is a cost-benefit here, too. Chatbots can reduce your need for customer service agents, allowing you to reinvest time and money into more profitable areas of your business.
Looking for some more information about how digital transformation could benefit your business? Read our blog on digital transformation examples!