Key players in the banking and financial services industry understand how crucial it is to get a first-mover advantage. The competition is stiff.
Many new companies are entering the market by introducing innovative products and services that will gradually become vital to the everyday consumer.
Successful digital change and impact can only be possible with the introduction of disruptive IT solutions for financial services. Digital banking, for instance, which seemed unimaginable 25 years ago, now has a projected value of USD 31.81 billion by 2027.
Why? Because these banking technology solutions made consumers' lives easier. The world is slowly but surely advancing towards a paperless society. People need to be able to access their finances and conduct transactions anytime, anywhere.
Trends in the banking and financial services sector are gradually transforming the way we, as a society, manage our finances.
As FinTech startups laser-focus on consumers' needs, wants, and desires, banks and the financial services industry must continue to introduce future-forward technologies to best their competitors.
Below we'll discuss some of the most in-demand IT banking solutions and how they aim to respond to the challenges facing the industry, which you will be helping to solve if you join Luxoft.
Core banking modernization involves replacing, upgrading, or outsourcing a bank's pre-existing core systems and overall IT (information technology) infrastructure. Such systems are vital to the bank's operations, be it securities, loans, payments, etc.
Technology is rapidly changing the world in all aspects. Banks must take advantage of this global digital transformation by redesigning their products and services to improve customer experience and satisfaction.
Core banking modernization must also be an effective means of responding to essential business objectives, such as growth, efficiency, and productivity. Modernization not only impacts the consumer. It also affects other businesses and their operations as a whole.
Automating tasks and removing legacy software and obsolete systems are two ways the banking industry modernizes its operations. These changes have far-reaching benefits, such as:
Artificial intelligence, machine learning, and robotics allow banks to set the standards for modern banking in a digital era. AI helps banks reduce the costs of operations and improve customer satisfaction.
Implementing data analytics, advanced ML (machine learning) algorithms, and secure in-app integrations, AI-enabled applications significantly improve customer service quality. These best practices also allow businesses to fight against cybersecurity risks, like fraudulent transactions.
One of the most widely-used applications of AI in the financial industry is chatbots. AI chatbots can offer round-the-clock support to meet customer needs. They are essential to providing each customer with a personalized experience.
AI software also allows banks to streamline and automate tasks which previously required human intervention. This renders the entire process much simpler, as everything takes place on a virtual platform.
AI-enabled apps can minimize bank employees' workload and improve their work quality.
AI in the banking industry also helps improve data collection and analysis. AI can glean invaluable data-driven insights after processing large data sets. These insights allow banks to make business-oriented decisions and easily predict future market trends.
Regulatory compliance ensures banks retain their reputation and standing among their competitors. Compliance involves customer data protection and implementing other anti-theft measures to prevent government penalties.
Banks achieve regulatory compliance through a dedicated compliance team that sweeps and cleans webpages and other documents to keep up-to-date with new regulations.
Further, AI-powered software can automatically search for banking-applicable rules and ensure the bank's compliance.
Banking and financial services companies are innovating the playing field by introducing digital currency.
As the name suggests, digital currency refers to any type of currency exclusively available in digital format. It must not be confused with electronic currency, simply a conversion of physical money.
Much has been said about the volatility of digital currencies, in particular cryptocurrency. But they open gateways for the involvement of the industry.
For example, banks can mediate common security concerns of cryptocurrency holders by improving cybersecurity measures for digital wallets.
Digital currency also offers opportunities for more secure payments and transactions. Banks may take advantage of public blockchains to expedite the payment process. With high processing power, blockchains may also be capable of clearing houses and making transactions more seamless.
Even if banking and financial services firms were one of the first to adopt a digital transformation in their systems, they are still adopting a more cautious approach towards cloud technology solutions, primarily due to security and regulatory concerns.
Industry experts and stakeholders echo such sentiments by espousing the importance of having effective risk management solutions before fully embracing the cloud.
However, the benefits of cloud adoption cannot be ignored. Cloud computing allows banking firms to implement better data backup, protection, and disaster recovery structures.
As it is available on demand, the cloud allows banks to reduce their infrastructure, leading to faster set-up times. Thus, the product development cycle is exponentially lowered, providing better efficiency and speedy customer response.
There is no pressure for banking firms to adopt a full-cloud technology approach. Many still implement hybrid cloud models, which prove to be cost-effective and secure. In addition, banking institutions can select from different cloud service models that meet their needs.
For instance, Business Process-as-a-Service (BPaas) can be used for administrative processes like billing, human resources, and payroll. Meanwhile, Platform-as-a-Service (PaaS) models offer customized solutions for banking and financial institutions.
Banks can manage an all-in-one platform for testing, application, interface, database development, storage, etc. This effectively streamlines custom application development, maintenance, and support.
FinTech, or financial technology, is an umbrella term referring to mobile applications, software, and systems developed to automate traditional financing processes.
FinTech benefits businesses and consumers alike through innovations like mobile app payments and blockchain networks.
One significant benefit of FinTech is its ability to simplify business and consumer-related transactions, making them more easily accessible and cost-effective.
FinTech is also vital for companies and other service providers using AI, machine learning, big data, or encrypted blockchain technology. It helps secure billions of daily transactions globally.
Today, many financial institutions offer various services under the FinTech umbrella. Developments range from traditional banking activities to mortgages and trading. FinTech apps are laden with features that ultimately improve the customer experience.
One cannot understate the importance of information technology to the banking and financial services sector enough.
Industry pioneers and disruptors are constantly changing the game with groundbreaking products and services, bringing us closer than ever to a digitally-empowered world.
Luxoft dedicates itself to this dream. We help forward-thinking partners navigate an increasingly digitally-dependent world through testable, scalable, and agile IT solutions.
Together, we drive businesses towards unparalleled digital transformation.
Contact us now and be part of the digital transformation. We’re looking for professional tech talents who want to make a difference through the development of agile, testable, and scalable innovations.
Visit our careers page for more information.
IT or information technology solutions for banking systems refer to the utilization and implementation of advanced technologies to help banks provide better services to their customers. IT offers better reliability, affordability, and efficiency, helping banks edge out their competitors.
Core Banking Solutions (CBS) refers to an interconnected ecosystem of bank branches, allowing customers to organize accounts, transfer funds, and use other banking-related facilities anytime, anywhere.
Digitization is one primary advantage of information technology solutions in banking. They also provide better convenience, improved security, and cost reduction.
Here are some technology systems implemented in the finance industry:
AI can have significant impacts on corporate banking. Compared to traditional systems, it can more accurately predict and assess loan risks. Banks keen on increasing their market value can look into machine learning (ML) to help reduce financial risks.