The development of new-age digital tools and technologies and their adoption in the business models have brought radical changes in various businesses. The digital disruption caused due to IoT, Artificial intelligence, Blockchain, machine learning, 5G, and ledger technology has impacted many industries including banking and finance. The risks of digital disruption in financial services are real and dramatic. Accenture- a leading global business consulting firm recently reported that up to 40 percent of incumbent businesses will be displaced by digital disruption by 2020. Industry insiders in the finance sector expect to lose as much as 23 percent of revenue to leaner tech-enabled competitors by 2020.
Regardless of the size and nature of businesses, all organizations need to adopt advanced software and communication technologies to stay competitive. Software not only makes a powerful impact on customer-facing business models but affects all parts of the production cycle- service coordination, supply chain, human resources, payment processing, marketing, and more.
Advanced digital technologies are going to change the landscape of banking and financial service providers. Here is a checklist of some ways in which digital disruption has affected banks and lending institutions.
- Digitization of Banking Technologies
With the evolving consumers’ needs and expectations and the Covid-19 pandemic hitting hard, more and more businesses including banks and financial service providers are delivering online services, changing the traditional model to internet-enabled business models. Large-scale digitization as a result of digital disruption has led to enhanced efficiency through mobile banking, quick turnaround time, better payment solutions with cutting-edge payment apps, and providing maximum value to customers.
- Better Online Customer Service
Customers no longer have to visit their banks’ branches or waste their time in long queues as they can easily resolve their queries and get paid at their doorsteps through AI-enabled chatbots and Whatsapp messages. Incorporating Artificial intelligence, Machine learning, data-driven insights has led to faster product delivery, better customer experience, and compliance.
- Streamline Efficiency and Speed of service
Blockchain technology has caused major digital disruption in the financial services industry and has led to enhanced efficiency, improved security, and better cost-effectiveness. More and more financial institutions are relying on Blockchain technology for safe and secure payment for inter-bank transfers, fraud detection, prevention of money laundering, loan processing, and more.
- Better payment solutions and credit settlement
Digital technologies have led to the emergence of many Fintech companies that are pushing traditional banks and financial companies to adopt cutting-edge tools and technologies or risk significant losses in the business. Fintech companies offer the convenience of mobile banking providing real-time transactions, innovative solutions, and maximum time and cost-saving to customers.
- More Transparency and better collaboration
Besides the digitization of banking services, analytics and cloud technologies have helped bring more transparency in business operations and facilitate smooth and better collaboration among their banking partners, clients, and other stakeholders.
Hence, it can be safely said that digital disruption has led to a paradigm shift paving the way for banks and financial organizations to become more productive, efficient, cost-effective, and customer-friendly.