Financial Sector Emerging Trends
According to IDC (International Data Corporation), $114 billion was spent by the financial services industry this year on BDA (Big Data and Analytics), cloud, and mobility, worldwide. In the face of increasing competition, banks, and financial firms will only continue with their quest in finding innovative ways to add value to their services in order to attract, and retain customers. Since the number of transactions done online is increasing year by year, banks and financial firms will be concentrating more on improving the speed and efficiency of the transactions, as well building a stronger defense against cyber attacks, as well.
The increasing role of technology in the financial sector
The advancement in technology is changing how the customers interact with the banks/financial institutions day by day. There was a time when a customer had to visit the bank in person to conduct most of the transactions. Now, with mobile banking and Internet banking, most of the transactions can be conducted from one's home only. Even if you want a loan, a short term loan or an emergency loan, you can just apply online. Also, this has allowed new players to make their mark in the market that once was dominated by traditional banks. FinTech companies are nowadays offering traditional banking services at a low cost, thanks to smartphones, apps, and the Internet. Google, Twitter, Facebook, and such online social media and social networking service providers, with their large user base, are moving into the financial sector.
Big data and IoT (Internet of Things)
Financial institutions are waking up to the immense potential of big data. They can take the data, analyze it, and then leverage it to provide customized services to their customers. This will not only help to earn customer loyalty but also attract new customers. Multi-channel, real-time activities can take advantage of the IoT data to present the right offer at the right time to retail banking customers.
The rise of non-banking financial institutions
Ever since the financial crisis, a number of banks have stopped lending to some of the constituents, such as startups and SMEs. The reason for that is the increased cost of capital as a result of the regulatory pressures. Now, on the other hand, these regulatory pressures are not applicable to non-banking financial institutions. As a result, they are able to offer what the banks are not able to offer and thus increase their client base.
Increasing segmentation of the financial sector
Regulators are demanding increased transparency with regards to fees and interest rates from banks and other financial institutions. There is increased pressure to go back to the wholesale/retail banking model. As a result, financial institutions are/will be focusing on core consumers. The new players in the financial sector will continue to obtain market shares via innovative methods, such as crowdfunding, P2P lending, and so on.
By understanding the trends that will impact the financial sector in the coming years, financial institutions would not only be able to increase their business but also make a better presence in the ever-competitive financial world.