Top 7 Digital Transformation Trends in Financial Services for 2019
If you’re wondering if we’ll see a financial shake-up in 2019, the answer is yes—at least when it comes to digital transformation. We will see big changes this coming year, especially for the banking giants, many of which have operated with a legacy-era brick-and-mortar mindset for hundreds of years. The truth is, consumers now have so many options when it comes to banking that even the most established financial institutions will need to work to stay relevant if they want to stay ahead. Below are what I consider to be the most significant digital transformation trends in financial services industry for 2019.
When was the last time you set foot in an actual bank? In today’s digital banking environment, most of us are also able to deposit checks—transfer funds—apply for loans!—all from our mobile devices. Mobile banking is truly an environment where he with the easiest app wins. The change means that today’s banks are looking at their brick-and-mortar locations not as places of business, but—in many cases—pure overhead. Today’s customers don’t want a pretty building. They want 24/7 access, easy-to-use (and glitch-free) apps, and as little human contact as possible. This year, we’ll be seeing an increasing focus on bringing even more customer-centric services to the consumer marketplace via mobile banking, be it text-to-save or a new focus on mobile pay. (Just as Lloyd’s, which invested £1 billion in digital transformation in 2017 alone.)
The past few times I’ve entered a store (without my wallet) hoping to pay with mobile pay, I’ve been disappointed. Many stores in the United States specifically still aren’t set up to accept mobile payments, but I anticipate that changing drastically this year. I believe 2019 will be the year that mobile pay becomes a “normal” part of retail—especially if brick-and-mortar retailers want to remain relevant in today’s mostly paperless marketplace. In fact, even retailers like Honda have introduced mobile pay options gas via their own car dashboards! If Honda can do it, big banks and other companies certainly can, as well. I’m really looking forward to seeing how this digital transformation trends in financial services plays out.
Are you catching on? Almost all digital transformation trends in financial services and banking are going mobile. But that also includes third-party financial service providers who are now competing with banks in the financial space. This could be unconventional lenders, financial managers, or simple financial budgeting apps. As we move into 2019, banks themselves will need to consider how they integrate with these third-party services—what information to offer, which companies they’re willing to partner with, and which of the services they may be able to offer to their customers directly—eliminating the middle-man altogether.
Banks stepped up in 2018 and created Zelle to challenge payment apps Vemno, Cash, and PayPal. I think we are going to see more of this in the coming year. Banks will need to stay relevant to customers by going where they are.
Last year was kind of a letdown for blockchain overall, but I do believe blockchain will see an uptick this year—just not through bitcoin, as many would have anticipated. Instead, blockchain will prove to be a huge asset in digital payments, escrow services, loan processing, and just about every other area where valuable information or currency needs the utmost security. I also think we’ll see an increased use of blockchain in “RegTech”—helping automate processes that need to meet certain regulations before being executed.
Automated Wealth Managers
AI is playing an increased role in just about every industry this year, and nowhere is that more true than smart (automated) wealth managers—er, wealth bots. Using complex algorithms, AI-driven bots can calculate the best investment opportunities, the best interest rates, the best loan providers—pretty much everything someone needs to stay on top of their investment prospects. For all you financial planners out there—you might think long and hard about how you can start digitizing your business in a way that makes you competitive in this soon-to-be booming industry.
Face it: data is everything today. But it’s not enough just to have it. Banking and financial institutions need to have the machine learning tools to process it quickly and accurately in ways that allow them to better serve customers, save money, save time—or make money more efficiently. As far as digital transformation trends in financial services go, this one will have the most impact, in my opinion.
Cleaning Up the Smoke and Mirrors
Have you ever submitted an online application or submission form, assuming it was being automatically processed—only to find out the digital submission went directly to a human person who may or may not read it any more efficiently than if you had submitted the application by snail mail? Today’s banks are in a stage where they need to bring the back-end up to date when it comes to the automated services being provided on the front end. After all, you’re only as efficient as your least efficient process. And in banking and financial services, there are still many legacy-era processes that need to be updated.
Digital transformation trends in financial services could bring about massive change. I’m truly excited to see how much paper—time—cost—and headaches technology will be able to eliminate this year through an increased focus on innovative financial services.
The original version of this article was first published on Forbes.
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