FinancialTechnology – EngineerBabu Blog https://engineerbabu.com/blog Hire Dedicated Virtual Employee in Any domain; Start at $1000 - $2999/month ( Content, Design, Marketing, Engineering, Managers, QA ) Fri, 08 Jan 2021 12:26:30 +0000 en-US hourly 1 https://wordpress.org/?v=5.5.11 Digital Transformation in Finance https://engineerbabu.com/blog/digital-transformation-in-finance/?utm_source=rss&utm_medium=rss&utm_campaign=digital-transformation-in-finance https://engineerbabu.com/blog/digital-transformation-in-finance/#boombox_comments Mon, 26 Nov 2018 13:32:15 +0000 https://www.engineerbabu.com/blog/?p=12311 Digital – the buzzword used or over-used for quite some time now, brings in a huge impact on the financial & banking industry. Digitalization or Digital transformation is nothing but the restyling of financial services. Right from customer services to machine learning, from Artificial Intelligence to mobility; the finance industry is modified from complex, time-consuming...

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Digital – the buzzword used or over-used for quite some time now, brings in a huge impact on the financial & banking industry. Digitalization or Digital transformation is nothing but the restyling of financial services.
Right from customer services to machine learning, from Artificial Intelligence to mobility; the finance industry is modified from complex, time-consuming operations to a more simplified structure and right at the helm, leading this transformation lies Revolutionary Financial Technology (or FinTech) Companies.
Digital transformation is utilizing technology such that it re-creates into efficient operations & processes. Digitalization is not a replacement to the traditional systems but utilization of technology to make the existing system or services significantly better.
So, what exactly is the difference between digitization and digitalization?

digitization and digitalization
People often get confused in these two terms. So, what exactly is the difference?

Many find them similar but Digitization is the process of storing, converting, processing or transferring information in a format recognized by computers.
Whereas, Digitalization is the change in social, business and economic behavior on the adoption of new technology
.
The essence of digitalization is the way consumers, businesses and the government adopt & incorporate technology to collaborate with systems, processes, people and the entire business community.

One of the best examples of digitalization is the 
Apple watch.

Apple watch
Source: uxinmotion.net

The Apple Watch is a perfect specimen to understand digitalization, it shows how a normal watch can be transformed into a watch with a phone, messaging and internet capabilities.
Another good example is the mobile numbers linked with Aadhar Card (Unique Identification Number for residents of India) which in turn is coupled with the financial account of consumers.
However, it is not only technology but the changing corporate scenario, business processes, and operating culture, that drives digital transformation to success.

The financial projects eyeing digital transformation are long-term, massive in scope and comes with risks too. Though many consider digital transformation a hype or the confusion, it does involve a sincere & serious change in business spectrum. Since the time digital transformation entered the finance domain, there have been many surveys and research to understand the importance or impact of the same. Digital transformation technology calls for an investment in hardware, software and sometimes even in products or services.
Gartner survey with financial executives from huge corporate establishments revealed that 62% feel digital transformation is a management initiative while remaining consider it as a part of optimizationAlso, many companies are keen on investing in technology that can speed-up their businesses. In fact, companies opt for investing in digital transformation to differentiate from their competitors.

Impact of Digital Transformation on Finance

Digital disruption has heavily impacted a variety of habits and behaviors of the professional world. Technology combined with smartphones and the internet provides numerous benefits to the customers as well as to financial establishments. Previously the implications of digital transformation were unknown as people were concerned about the transition from manual to the digital world. However, the scenario has changed now. With tighter regulations and changing customer demands, the financial applications and systems have become nimbler and progressive.

For financial establishments,
digitalization is more than just adopting technologies such as cloud, big data, social media or mobile. It is aimed more towards creating new business models to develop an eco-system where all markets & consumers could participate.
Thus, organizations focus more on capitalizing with new and emerging technologies that help them in positioning and transforming the teams into high performers.
Digital transformation enables digital tools to enhance productivity & efficiency and change of hard paper documents to secured PDF or HTML formats. The days with an application form and product sheets are gone. The sales team & field officers are now empowered with smartphones and other portable devices where information can easily be displayed. Many financial services providers have embraced digital transformation. However, many companies have taken hold up approach of observing the developments and then decide on investing in digitization.
Digital transformation comes with its share of risks, and hence a setback approach is a safer route.
Digitalization has positively impacted the economic growth and has accelerated the growth of innovations. Many are on for a debate that there is no economic growth, but the signs of potential positive impact are quite visible; the best examples are the mobile banking apps, mobile money, and e-wallets.

Source: theninehertz.com
With the introduction of banking apps; Mobile Money and E-Wallets have taken a center stage in Finance all across the world.
Source: theninehertz.com

Enlisted here is the importance of digital transformation on financial sector:
1. High Standardization: Finance functions are always considered as high performing. When these are integrated with technology systems with standardized processes and data; leads to a high standardization.

2. Highly Automated functions:
Adoption of new technology tools lead to higher process automation for services such as money remittance, procurement orders, invoice generation, and KYC verification.

3. Faster Performance: 
With the adoption of big-data and other machine learning tools in finance, it is easier to predict and forecast budget allowing teams to finish month-end cycles before time.

4. Insight-driven functions: Digitalization has modified financial models in such a way that the resources concentrate more on deriving insights rather than focusing only on transactions.
5. Improved customer and employee experience: The same level of information is available with customers and employees and thus less chaos in transactions.6. Better Service Delivery: The legacy systems integrated with new technologies have changed the finance’s operating model. The structured processes have improved service delivery.
Along with the high importance, the major priorities & challenges for financial services and banking establishments over the world that would impact their business includes strategies listed below:

  1. Acting in line with the regulatory requirements
  2. Reduced costs or improved margins for retail business operations
  3. Improved customer segmentation
  4. Enhancements in services, product designs, and promotional channels
  5. Migration from physical or legacy channels to a digital platform
  6. Integrating the legacy systems with new technology following all compliance and guidelines

Financial organizations now implement these strategies and they can digitally transform and automate their processes. The impact is such that there has been a drastic improvement in performing customer operations in a lesser time-frame. The automation has lead financial companies to meet regulatory deadlines, achieve operational and transactional risks and still stay competitive by investing in technology.
Digital transformation has assisted in automating monotonous tasks, management of compliance and accounting & operations functions which include accounts, reports & analysis. Digitalization also reduces the possibility of cyber risks and minimize errors that occur due to the execution of robust strategies.

Critics response to Digital Transformation

Despite the positive impact of digital transformation, critics believe this is a wonderful opportunity for tech vendors to restyle their services & products and sell them in the name of digital transformation.
Well, another critical point to note here is that none of the tech guys spend their working hours digitally transforming or innovating, but instead spend time in programming, coding, and development. However, critics do not realize that this coding, programming, and development is what makes a system perform in a particular manner. The technology drives these systems and hence the transformation.

Why digital transformation matters in finance?

Digital transformation may only seem to be a buzzword, but as they say, there is more to an iceberg than appears on the surface, there is definitely more to our story of digital transformation as well.
The concept of digitalization assists financial service executives in altering the already set rules, and the economic growth is quite visible. The customer-facing mobile apps are the best examples. The increasing number of people relying on the mobile and online banking applications, the financial and banking services are on a race towards digital transformation. The more convenient an application is for customers, the more is the digital transaction and financial growth.
For banks and credit card companies, providing a mobile customer experience with no downtime and faster transaction process is of higher importance. The other financial establishments such as capital markets, funds, and equity market utilize big data and automation tools for data analysis and high-performance computing to track milliseconds of transaction data.

Digital Transformation Flowchart
Progression from Digitization to Digital Transformation

A closer look at both the examples reveals that the business is capitalizing on technology to improve customer experience.
The primary aim of digital transformation in the financial sector is to be more customer-centric.
In financial services, competition is not just with other financial services providers but with anyone offering a real technology and consumer experience. The focus while digitizing financial services or while developing financial mobile applications should be to make the customer’s lives easier. Here, it is essential to make a point that digital transformation is not a technology strategy but a business strategy that makes business swift and quick to respond to the market.

Digitalization has unlocked newer opportunities in the banking, credit and capital market functions of the financial domain. There are multiple branch locations, and it is hard to keep a branch right next to the consumer; hence mobile apps that keep your office straight in your hands. Having said this, many financial institutions still rely on their legacy systems that run on IBM frames and are built on COBOL.
These systems, however, cannot be upgraded or updated as the developers too have moved to the newer technologies. It is a considerable challenge for some financial services companies to pull out the data and get on to the modern technology-based system. Other than the integration of the legacy system with advanced technology, the keenness to embrace digitalization by company workforce was also a challenge. But with the disruption in existing services and products, it is essential for companies to focus on acquiring new skills and technology.
The key to surviving in a digital environment is to adapt and adjust to the changes. CIOs take this responsibility to adopt the changes and lead the transformation. Though the right technology will outgrowth the efficiency, it is the workforce that ensures successful implementation.

Digital tools meant to support financial functions

The digital tools meant for financial services industry focus more on improving and updating the existing competencies and core systems. There are other exponential tools too that are intended to deliver new capabilities.
The growing technologies disrupting the financial system includes:

Cloud
The benefit of adopting cloud in finance is unquestionable. Cloud brings further acceleration and swiftness. Cloud technology in financial services expedites new digital workflows enabling effective interdepartmental collaboration or collaboration between business and third parties. The financial institutions use SaaS-Based cloud applications for business processes such as HR and accounting. As the workforce and the team heads get comfortable with the application, it gets integrated with the core systems.Financial services/solutions find security & compliance as crucial problems.

cloud computing in financial services
Cloud Adoption Concerns in Financial Services
Source: slideshare.net

However, with cloud-enabled applications, it is easy to scale data for critical functions such as credit scoring, consumer payments, statements and billings for essential account functions. Also, data speed is vital for financial firms to stay competitive and in effect. Financial services industry is the primary target for cyber criminals, owing to sensitive personal information. The quickness of cloud safeguards the critical data, digital financial assets, and user information while protecting the employee performance.
Robotic Process Automation
One of the hottest entry in the financial services vertical is the robotic process automation. Financial establishments work on multiple technology systems and process robotics assist in automating transaction processing and communication across various systems.

Robotic Process Automation
RPA efficiently replaces human involvement and consequently reduces human errors in the process.

Process robotics address the key challenges of the financial sector and can be effectively utilized for:

  • Billing and collections operations & accounts receivable functions
  • Journal entry, allocations & adjustments, inter-company transactions
  • Reporting-financial as well as external
  • Budgeting, Planning & Forecasting
  • Treasury processes

Process robotics will enhance the functionalities of legacy systems by lessening inefficiency and addressing the manual intensive activities. Although Process Robotics is at a testing state at a few organizations but is working exceptionally well to support legacy systems.
Data Visualization
When it comes to communicating across multiple departments within the financial organization, data visualization is the key to attain insight. Business executives have an enormous amount of data but communicating in regards to same was an issue.

Data Visualization
Data Visualization is the key to attain meaningful insights.
Source: dribbble.com

However, with data visualization, one can easily track and predict organizational performance. The financial sector is considered as the data hub. With data visualization, the analysts can explain complex data, trace intersections of information and present details based on this analysis that helps in forecasting organizational performance.
It is estimated that more than 65% of people are visual learners. Data visualization technique provides decision makers with detailed visual data illustrations so that they can understand the analytics through visuals and make informed decisions.
Data visualization can also help the financial sector in identifying new and additional trends for interactive features and more profound insights. In fact, data visualization is used by the financial leaders to track KPIs- financial and non-financial both. Also, these financial leaders improve team performance by correlating the KPI metrics and data analysis.
Advanced Analytics
Today, there are several different channels through which the customers interact with their financial services provider. Because of the multiple channels, there is a load of customer data being collected by financial organizations. This data can be effectively leveraged using Artificial Intelligence or advanced or predictive analytics to gain insight into consumer behavior. Advance/predictive analytics can assist financial establishments to optimize their processes thereby reducing costs.
Predictive Analytics
Predictive Analysis is best used in applications such as Fraud Detection. The dashboard of predictive analytics reports prompts and provides notification on anomalies in transaction data. Other than detecting the anomalies, the advanced analytics software can assist in collecting, cleaning and analyzing raw data. The analytics also assist in identifying customer trends by predicting marketing efforts and analyzing customer past and present online behavior using machine learning algorithms.
Advanced Analytics improves a variety of finance functions and assists financial leaders in achieving insights such as:

  • Improving supply chains
  • Revenue Forecasting
  • Identifying the trouble spots
  • Fraud detection

The combination of human judgment with automation and advanced analytics provides an ethical oversight to the business.
Cognitive Computing
Cognitive computing is yet another constant disruption in finance. It is the technology that makes use of natural language processing, machine learning, speech recognition, and computer vision to stimulate human thinking. For financial organizations, it is essential to collect, analyze and use data to improve decision making. 

Cognitive Computing
An idea inspired by cognitive computing. While chatting or performing financial transactions through cognitive computing, the avatar responds in different facial expressions according to the content of the conversation. It makes it appear more like a face-to-face conversation, enhancing the facial expression/emotion that is usually missing.
Source: dribbble.com/phoenixjah

Some of the basic elements of cognitive computing are:

  • It enables financial organizations to obtain personalized information about the customers and use the same to notify about payments, bills, and other reminders. Cognitive computing also offers suggestions regarding exceeding customer payments and other intelligent automation services.
  • The cognitive computing also ensures the creation of conversation interfaces for placing customer queries and responding to them. Chat-bots are the best example of AI-powered digital assistants, developed to respond to customer queries thereby improving consumer services and CRM.
  • Robo-advisors too are a part of cognitive computing but are not AI-powered. The Robo-advisors use algorithms to read through data and come up with a suitable suggestion.
  • Cognitive technology works similar to human thinking but is considered as key to security. Protection of financial data is vital; hence cognitive computing is the solution.
  • With complex laws and regulations within the financial sector, poor knowledge of data policies can make finances a challenge for customers. With cognitive computing, real-time updates on rules and real-time implementation of the policies help in keeping policy documents updated and encourage good compliance.
  • Cognitive computing has enabled real-time trading analysis and improved trading systems so that customers can be served faster and better.

Cognitive computing has been beneficial for both the company and customers. Apps enabled with algorithms, machine learning, digital advisors and improvement in cyber security have positively impacted customers to manage their finances.
In-memory Computing
With financial companies dealing an enormous amount of data, higher transaction volumes and increasing compliance; there arises a need to address real-time data analysis challenge. If it is finance, it has to be high performing, but with enormous data load, the efficiency can be at stake.
The massive amount of trading and accounting data calls for a robust infrastructure, with high speed of transactions and in real-time. In-memory computing platform addresses these challenges. The information is stored in the main random access memory of specialized servers. This means that it eliminates the delay while retrieving data from servers.
The 24-hour mobile banking pile up huge data and at the same time the regulations, exchange rates, interest rates, share prices, etc. are also required to be updated. The in-memory computing platform offer users with real-time information and calculation. It also provides information around commodity trading in real-time at an excellent speed for the users to experience a never before financial experience.
BlockchainOne of the most trending digital tool these days is Blockchain. With the advent of Blockchain technology, the financial services industry is considered to have entered into a new digital era. This new technology has changed the way we think about transactions and has revolutionized the economy. Blockchain technology stands out of all the technologies that have disrupted the finance vertical.
Blockchain powers decentralized digital currency also called as cryptocurrency.
Recommended Read: How is BlockChain Revolutionizing Finance  
In Blockchain technology, encrypted blocks of data are considered as currency and are shared during transactions. Blockchain technology makes use of advanced encryption techniques to verify currency and transaction. Blockchain technology ensures that only the authorized users who own the part of Blockchain can edit the data using the private key.
Smart Contract is one of the most attractive applications of Blockchain technology. It automates the execution of commercial agreements and transactions. As Blockchain technology entertain no middlemen, smart contracts are considered more secure than the traditional agreements that adds up cost for the middlemen. It is also believed that the Blockchain technology will assist in fraud reduction, enable one time KYC process, efficient & cost effective trading, and many more.
The technology may sound a promising one, but still many challenges need to be addressed to transform the finance and banking sector with Blockchain technology completely.


Concluding View

It is just a matter of time before we see the described technologies disrupting the financial sector. With consumers becoming smarter and more demanding,

It is essential for commercial establishments to undergo digital transformation to appeal, capture and maintain the attention of consumers.

 

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AI & Blockchain in Banking or FinTech https://engineerbabu.com/blog/fintech-in-2020/?utm_source=rss&utm_medium=rss&utm_campaign=fintech-in-2020 https://engineerbabu.com/blog/fintech-in-2020/#boombox_comments Wed, 21 Nov 2018 13:27:12 +0000 https://www.engineerbabu.com/blog/?p=12263 Financial Technology or its portmanteau ‘FinTech’ is no longer confined to the dark and dingy corners of back-offices, in fact, it has taken center stage by making itself indispensable to almost all of the customer-driven processes. Any digital transaction, be it, online shopping, foreign currency exchange, stock investments or money transfers, is possible at our...

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Financial Technology or its portmanteau ‘FinTech’ is no longer confined to the dark and dingy corners of back-offices, in fact, it has taken center stage by making itself indispensable to almost all of the customer-driven processes. Any digital transaction, be it, online shopping, foreign currency exchange, stock investments or money transfers, is possible at our fingertips thanks to ‘FinTech.’  So, how did FinTech come to play such an essential role in the lives of us consumers and What FinTech Trends we are going to witness this year?

As Mr. White used to say – “I am the one who knocks”.
This new explosion in IT is definitely the one that is knocking on every VCs and investors doorstep. This could be precisely said because the overall investment in Financial Technology has already surpassed the 2017 results in mid-year itself.
Let’s take a look at some of the major breakthroughs that occurred in FinTech this year,
• The acquisition of WorldPay
WorldPay (now WorldPay, Inc) was publicly listed payment processing platform which provided online services for accepting electronic transactions by a variety of methods such as credit card, bank based or direct transfer. It also offered a range of merchant services and operated in an extensive demographic (400,000 merchants in 146 countries) across the globe. It was acquired by Vantiv, a leading provider of payment processing services and related technology solutions for financial institutions. The $12.9 billion acquisition came as a significant step forward for the two giants.
WorldPay which competes with the likes of VeriFone, PayPal, Stripe and several others gained significant momentum after the acquisition.
• The Funding of Ant Financial
It didn’t come as a surprise to many when China’s Ant Financial raised about $14 billion in its last seed round. After all, it is backed by one of the biggest names in the industry (Alibaba Group Holding Ltd.).

Funding Fintech in 2019
Source: www.ft.com

The funding made Ant the world’s leading FinTech firm. The funding undeniably equipped them with enormous resources for expansion. The affiliate of Alibaba Group Holding Ltd. is alreadyChina’s biggest online payments service and even controls the world’s largest money market fund.
Now, with the help of our partners, we are going to accelerate our strategy,” Ant’s CEO Eric Jing said in a statement to Bloomberg.

Recommended Read: Top 10 FinTech Companies Transforming Finance in USA

Analyzing the above developments we could accurately predict where FinTech is headed in 2020.
Let’s take a sneak peek,

Fintech Trends in 2020

1. RegTech is here to stay

Compliance, Complexity, Cost and Bureaucratic processes have always stifled the development of the finance industry. The long and tedious processes have proven to be a bane for the industry. This led to the reincarnation of a morbid industry that never saw a significant thrust since the spurt of the dot-com bubble. Consequently, we are seeing a lot of financial firms shifting to Regulatory Technology (RegTech) to bridge those gaps.
One must wonder- What exactly is RegTech??

It is essentially the use of technology across financial services functions to ease financial tasks such as regulatory compliance. It has a significant impact on financial services.
In simpler words, it is a
technology that helps financial service firms get better at dealing with regulation. For instance, Know Your Customer (KYC). But the benefits of RegTech far exceeds than just KYC.
As the world is moving from big data to ‘smart data’, technologies such as artificial intelligence and machine learning are enabling companies to gain insights into regulatory practices, automate reporting, carry out a meaningful inspection of critical compliance risk areas and even potentially create an end-to-end view of compliance.
Companies are using RegTech to deal with the vast amount of data they are generating. More data handled the right way also means better information.
Many VCs and investors have already started riding on the RegTech bandwagon, due to which there has been a significant increase in the investment across this lucrative sector.
There has been an investment of $1.37 billion in the first half of 2018 – more than for all of 2017. RegTech has a promising future ahead, and these new-age startups will be the ones to watch out for in the upcoming calendar.

1. Governance.io / governance.com:
Based out of Luxembourg, and founded by brothers Bert and Rob Boerman, this RegTech startup provides smart technology and support services to facilitate the control of regulated companies. They raised their Series A round this year, Governance.io has established itself as a platform for good governance through the use of technology and support.
Deployed at-premise or in the cloud, the solution allows all stakeholders to collaborate on data, documentation, and workflows. It also provides a white-labeled client portal to exchange data and collaborate on meetings and due diligence questionnaires.
A network of governance supports clients that can provide hosting, operational support, regulatory advisory, and other support services.

2. Advanced logic analytics:
This UK based startup was founded in 2015. Riding on new age technologies, ALA has established a stronghold in the Compliance sector. It offers enterprise-wide big data and financial analytics solutions for buy and sell-side institutions and other financial firms. Their data science-led business offering and AI driven algorithms bring alternative data insights for financial institutions. By using machine learning-based analytic techniques, ALA develops and apply risk calculations. Communications and other source data are scored against a series of Key Risk Indicators (KRIs) to quickly pick up on any issues that could cause problems.

Fintech trends in 2019
RegTech startups that are creating a difference in the Compliance Sector

3. Agreement express:
Agreement Express provides onboarding automation software for financial services. Their platform allows wealth management and payments companies to deliver customer application, approval, and onboarding services across their offerings. They provide seamless integration to the back-office for compliance and risk workflows which is one of their most sought-after features.
4. Alyne:
The differentiating factor for this Munich based startup has been the market it caters. Alyne offerings include cybersecurity, risk management and compliance capabilities across all industries of all magnitudes. They call themselves “Business focused Software as a Service”.
5. Surety:
Surety caters to a niche segment of Regulatory Technology. They provide technology to protect the integrity of digital information using cryptographic time-stamping service. They are also one of the prominent providers of regulatory services such as IP protection and digital footprint preservation. Surety sanctions users to apply tamper-proof digital “Seals” to almost any form of electronic information. They are easily deployable across enterprise or cloud, providing long-term and independent proof with the guarantee that the information hasn’t been tampered since.
6. AppZen:
Appzen is an extremely impressive AI platform that utilizes machine learning to audit contracts, expense reports, and invoices. It integrates with all major ERPs, invoicing software, and expense automation products. This six-year-old startup is valued at $175 million and has recently raised $35 million in its Series B round. Appzen enjoys clientele such as Airbnb, Amazon, Citi Bank, Salesforce, Intuit, and 650 major organizations.
The goal is to address all the domains in the CFO organization,” AppZen’s Chief Executive Officer, Anant Kale said in a statement.
7. AQMETRICS: 
AQMETRICS provides GRC (Governance, Risk & Compliance) software for financial services firms trading on the global financial markets. Headquartered in Kildare, Ireland (EU), AQMETRICS has raised almost $3.3 Million in investment so far. They specialize in providing unified market surveillance and compliance solutions to investment management companies. AQMETRICS serves a suite of cloud-based solutions and supports a full range of global regulatory reporting.

8. Arachnys:
Arachnys’ vision is focused on exploiting the evolving markets rather than already lucrative ones because they believe emerging markets, which are often fragmented and poorly organized will see an explosion of business information. Unlike their RegTech counterparts, Arachnys, therefore, targets the Eurasian market more extensively. Their primary emphasis remains attractive markets like China, India, Russia, and the Middle East.
Arachnys domain expertise caters to Customer Risk Evaluation lifecycle by using cutting-edge technologies such as Robotic Process Automation, Machine Learning, Intelligence, and Natural Language Processing.
Their products are specifically tailored to serve a diverse customer base and are extensively customizable.

2. Artificial Intelligence:

In the early days of banking, bankers used to have personal connections with their customers. Each step of the banking process involved customer-client interaction. But due to the digitization of the banking process, this personal connection has been lost. So, is it possible to leverage the same technology to get that human interaction back?

AI one of the Fintech trends
Source- geniusmonkey.com

Many believe, A.I can be leveraged to bring back that connection.
Artificial intelligence (A.I.) will continue to govern FinTech in new ways. In 2020, we could see companies use A.I. to develop new commerce interfaces, with the number of companies looking into voice set to increase.
Let’s delve into the potential use-cases of A.I:

• Credit Scores
:
In traditional banking infrastructure, there were a lot of customers who were underserved and ignored. They couldn’t apply for a loan because they didn’t have a credit score. Many startups have stepped up to bridge that crevice.
Various applications are coming up to assist customers who want to apply for a loan but have no credit history for the bank to review. Many tools and technologies such as Psychometric Analysis, Behavioral Detection, Predictive Analysis, and mining of the borrower’s data through the web, social media, geo-location and even browser history are being deployed to ensure a detailed evaluation of the potential borrower. These technologies let banks build a vivid picture that allows them to evaluate whether a candidate is creditworthy.
• Security and Fraud Control:
The banking sector is the single most targeted area by hackers and fraudsters for obvious reasons. This anomaly allows for the development of some of the most innovative and hi-tech solutions in this realm. Machine Learning, Natural Language Processing, Optimized Algorithms, and numerous other tools and technologies are being deployed by financial firms and new-age startups to address this issue. Many A.I tools have also come into use to analyze and observe user’s critical behavioral patterns and issue warnings in case of possible security infringement. Due to these developments, it was observed in the Q3 that consumers are increasingly becoming more at ease at using A.I-driven applications and digital payment gateways to carry out their financial transactions.
• Customer Support Automation:
Time and again it has been witnessed that most of the customer-facing processes are becoming obsolete by every passing day. They are being revolutionized by the advent of Chabots and Virtual Assistants. It could be easily figured out as to what exactly is driving that trend. Automation of customer-facing services address one problem that has always costed companies in billions of dollar – Human Error.

customer support automation a fintech trend
Source: medium.com/techsee

AI-driven platforms utilizing Natural Language Processing (NLP) are turning more human than ever. This combined with no possible error in delivery makes it an ideal fit. Chatbots can not only answer customer queries intelligently, but they can also be integrated with social networking sites, and accept requests for applications and orders directly from social media channels.

Gartner prediction for 2018, projected more than 2 billion people would be diligently using conversational A.I to interact with virtual assistants on different platforms. The outcomes clearly surpassed the forecasts.

Recommended Read: 7 Tips for Starting a Fintech Company

3. Blockchain will venture beyond Bitcoin:

The much-hyped technology upon which Bitcoin and other cryptocurrencies are based – The Blockchain, is all set out to venture beyond Bitcoin and will serve various other markets and domains. Keeping in mind the potential of Blockchain, several banks and financial firms have planned for considerable investments in the domain. Many companies have rolled out pilot programs across a range of industries, including – financial services, healthcare and even global logistics. Earlier in 2018, several banks in Asia conducted a pilot in which Blockchain was used to transfer funds across continents in a matter of few seconds.

blockchain
Image Courtesy: twitter.com/chboursin


The following could be the potential use cases that can come into light in 2020,

1. Weapons Tracking:Blockchain could help tremendously in gun control and weapon accountability. This could easily be one of the single most significant reform that could change the entire state of firearm distribution. And gun control being such a trending topic on almost every new network. Blockchain could create a completely transparent and never-changing registry ledger that allows law enforcement to track down weapons and guns ownership. It could also be utilized to keep a record of weapons sold privately.

2. Digital Voting:
If you are worried about booth capturing or voter fraud. Then Blockchain will offer you a sigh of relief. Blockchain would offer the ability to vote digitally and at the same time be transparent enough that any regulator could see if any irregularity or fraud transpires. The decentralized nature and its immutability would ensure your vote truly counts.

3. Digital IDs:
Digital IDs with the help of Blockchain would be a boon for the impoverished and developing nations by giving them access to financial services. Tech giant Microsoft is already planning to venture into the domain by creating digital IDs within its Authenticator app.
4. Real Estate:
Since paper trails are frequently a source of confusion, it is entirely possible that Blockchain will take paper out of the equation. So, if one plans to buy or sell land, a house, or even a car you’ll just require to transfer the title. Thanks to Blockchain these titles will get stored on the network allowing for a crystal clear picture of the legal ownership.

5. Record keeping of medical records:
Patient privacy would be utterly discreet by the introduction of Blockchain in the pharmaceutical sector. The patients who possess the key to access these records will be in complete ownership of their data and will control who can access or view that data. Thus strengthening the HIPAA laws that are designed to protect their privacy.
6. Managing IoT (Internet of Things) networks:
Many networking corporations have announced that they are working on a Blockchain based application that will monitor the Internet of Things network. Such an application would help determine the authenticity of the devices on the network and would continuously do so for devices entering and leaving the network. This could drive a significant shift in device-to-device integration.
Recommended Read: How is BlockChain Revolutionizing Banking and Financial Markets

4. Financial Inclusion:

In the largest ever gathering of FinTech firms in Singapore, Indian Prime Minister, Narendra Modi introduced attractive policies and plans to invite investors to the Indian landscape.
I say this to all the FinTech companies and startups: India is your best destination,” said Modi, the keynote speaker at the Singapore FinTech Festival.
In Nigeria, FinTech startup NetPlus has come with a solution that provides simple and reliant digital payment system to the consumers. So, consumers of Nigeria who were generally skeptical when it comes to e-commerce, have embraced the platform.
Developments such as these are proving to be an excellent boost for evolving markets such as India, Brazil, Nigeria, Indonesia, and several others. Earlier when the FinTech hubs used to be just San Francisco, Singapore, and London, such developments are driving investors to these huge rewarding markets. This shift in the market will gain significant traction next year and developing nations would possible see tremendous growth in investments across FinTech and RegTech. Also, several financial establishments are planning to open up new premises in these countries which definitely suggests what is expected to come our way in 2020.


Wrapping up

My prediction for 2020:

It is big, It is growing, and It is disruptive.

FinTech would be the second-most significant transformation in Finance, since the first permanent banknotes. I believe, Financial Technology would not only disrupt the way we purchase and invest, but it would also alter the very definition of money itself.
FinTech 3.0 is upon us and banks, and financial firms will enjoy a roller-coaster ride riding on the FinTech wagon.  2020 will be the year of banks acquiring FinTech firms, or waiting for their slow demise. Those who catch the FinTech train would bolster, and the rest would be gasping for air.
After all, it is true what they say – You snooze, You lose.
EngineerBabuteam excels in creating fintech products utilizing the latest tech stacks. This is why so many of our clients have gone on to acquire record funding from renowned investors. One such dear customer of ours, BankOpen, a neobanking platform, recently raised $5M in Series A led by Beenext, Speedinvest, and 3one4 Capital. We possess solid domain expertise in developing FinTech products. Feel free to reach out to us for a free consultation.
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