What are the new digital solutions for the financial sector?

As part of digitalization, a global revolution is underway in the financial sectors

both in highly developed Western countries and in developing countries. Accessibility to banking services and increased personalization of personal finance products are two of the main trends surrounding the new wave of digitization. Since the first outbreak of the pandemic, humanity has devoted its attention to the development of sustainable digital solutions for the financial sector.

Work in a custom software development company With a focus on developing solutions for the financial and enterprise sectors, I find it inspiring that today’s society is going through a digital transformation on many levels. Currently, advancements in technology are enabling the BFSI (Banking, Financial Services and Insurance) industry to focus on understanding the behavior, preferences and choices of digital consumers and delivering targeted solutions that address impending market issues.

The rise of fintech companies

For several years, bank customers have noticed that the whole sector is in the midst of upheaval. Until the past couple of years, established traditional banking institutions have always been the ones setting the tone. But in many areas they are now cumbersome and outdated. Indeed, modern FinTech companies are disrupting traditional structures and introducing entirely new products to markets and even creating entirely new industry segments such as crypto trading, NFT shopping or fully digital virtual worlds.

In addition to online banking, which is now an established service in most banks today, there are a few other segments that have changed significantly due to digitalization or are in the process of changing. For a long time, bank customers stopped going to their bank adviser when they needed a loan. Today, loan applications, lending, and disbursements have shifted to digital-only service delivery, improving convenience, processing speed, and the overall consumer journey.

Electronic signature

What exactly is an electronic signature? Nothing other than a digital data record based on appropriate identity verification security, which allows a permanent link to an electronic file ensuring visibility and clarity, for example our willingness to enter into a specific contract. According to European regulations, there are three types of electronic signatures: simple, advanced and qualified. The qualified electronic signature has the highest level of security and is the legal equivalent of a paper signature.

Some of the benefits of electronic signatures include:

1) Increase the competitive advantage of companies and strengthen the possibility of efficient operation in the European digital market based on electronic legal transactions;

2) Effective document management – complete elimination of paper in business and management processes.

3) Accelerate the signing process – hundreds of documents in seconds anytime, anywhere, without the need to initialize each page;

4) Saving time and money – the use of the electronic signature service allows the automation and acceleration of business and management processes.

Digital credits

After the initial reluctance of many banks to adopt and implement digital solutions, many vendors are now trying to catch up with innovators. FinTech companies have had great success with their concepts and services, which is proven by the number of customers and positive reviews. As a quick example, UK startup Revolut is only 6 years old but already offers personal financial services such as digital credits, loans, crypto and commodity investments to its more than one million people. active users.

Many other providers offer similar digital solutions for the financial industry and have made the loan application process incredibly simple. There are now B2B (eg Klarna, Brex or Credibly) and B2C (eg Crif, Checkout.com or Monzo) providers where every step of the process is completely digital, ultimately speeding up the request and confirmation processes.

AI and ML

You’ve probably heard of artificial intelligence (AI) and machine learning (ML) and have at least an idea of ​​their capabilities and potential use cases for the financial industry. On the one hand, AI can be roughly described as the simulation of human intelligence processes using machines and computer systems. On the other hand, ML is a process that uses an algorithm to analyze data, learn from data, and make a statement or prediction about it. Together they can transform the world as it is known and more particularly the financial sector.

Most FinTech companies are already designing digital solutions based on AI and ML, but their importance is expected to grow further in the coming years. Some of the most popular use cases for AI and ML include fraud detection, personal money management, personalized advertising, accurate credit scoring or website chatbots, tailored offers and website chatbots. In the future, AI and ML are expected to become increasingly smarter and therefore deliver more value. Among the long-term goals of these technologies applied to financial companies are the automation of processes, faster delivery of financial services and accessible financial support.

NFT

If anything can be described as absolute hype, currently the top prize definitely goes to NFTs. Non-fungible tokens, or NFTs, use Etherium-blockchain technology that works similar to a logbook to record all digital transaction information. What classifies NFTs is that they have a non-tradable value, which means that an NFT is opposed to a tradable value, such as a currency – each NFT is unique and cannot be replaced by any other element.

Many financial experts, as noted in this Forbes article, fear the disruptive potential of NFTs for the financial industry. Despite the fact that today NFTs are primarily associated with the purchase of digital artwork, the future use cases for this technology are limitless and vary from healthcare (NFT-based health records ) and digital marketing to safer online payments and investment opportunities. Industry insiders predict that NFTs will have a strong impact on DLT or digital ledger technology which is already at the origin of syndicated loans, commercial financing and foreign exchange transactions. Most likely, NFTs will help to significantly reduce operational costs while simultaneously reducing the time required for various financial operations.

Biography of the author Aleksandrina Vasileva

Aleksandrina is a content creator at Dreamix, a custom software development company, and is passionate about innovative technological solutions that have a positive impact on our world. Her training in teaching, combined with interests in psychology, pushes her to share her knowledge. She is an avid reader and enthusiastic blogger, always on the lookout for the next inspiration.

This article does not necessarily reflect the views of the editors or management of EconoTimes

Helen D. Jessen