Top Digital Transformation Trends in Financial Services
Updated on Jul 23 2018
Financial services technology, a.k.a. “Fintech” is one of the fastest evolving digital marketplaces. Learn the top trends in how digital evolution has taken the financial industry by storm.
Brick and mortar banking institutions are becoming outdated as mobile and everything encompassing digital is taking over in finding more efficient ways to make spending, managing and investing money easier than ever before.
Consumers are moving to digital currency, deposits and investing, which is forcing the entire industry to rethink the concept of how finance has worked in the past. Technology is actually helping to ‘bridge the gap’ between people and finance.
Here are the biggest trends impacting the financial services industry:
1. Brick and Mortar Banking is Becoming Outdated
The majority of people today are doing all their banking online, on their mobile or tablet, through the ATM and with a financial advisor. In fact, reports show that 40 percent of Americans have not stepped through the doors of a bank or credit union within the last six months. As a result of online and mobile banking behavior, the number of physical banks has dropped by almost half from 1995 to 2015.
These changes in banking are contributing to the loss of brick and mortar banking locations:
- People are finding “financial wellness platforms” that allow them to digitally budget, bank, pay and crowd-fund.
- People are utilizing financial apps, such as Mint, Personal Capital, YNAB and Every Dollar.
- People are investing in an expert financial advisor or fiduciary to manage their finances.
Bottom line, there are many other faster, easier and less expensive ways for people to manage their money, other than utilizing the former financial giants.
2. Blockchain Is Reinventing Finance
Blockchain, a digital ledger in which transactions made in Bitcoin or another crytocurrency are recorded chronologically and publicly in a way that is permanent and unalterable in a “blockchain”, has created a revolutionary method for financial management of transactions. The technology is the ‘wave of the future’ for technological digital payments and allows for safe and secure trading of almost anything, such as money, ideas, copyrights or royalty fees, for example; while eliminating the middle man previously needed to facilitate the transaction. Blockchain is being used to manage the following:
- Real Estate
- Anything of Value
People are still learning about this technology, but it enables all transactions to be done virtually, with limited security risk; making blockchain revolutionary in the financial world.
3. FinTech Is Enabling Easier, More Fluid Transactions
FinTech offers a huge benefit over traditional banking methods as the digital and mobile user experience are much faster and easier than previous methods. In addition to eliminating the need to deposit your paycheck or send in your mortgage or utility payments, FinTech offers opportunities for crowd-sourced investments and the opportunty to borrow or finance, even purchase a large transaction, such as a home or car, entirely through your phone. FinTech is empowering users to see their finances more granularly, but also requires users to become adept at using the latest technology and apps available to utilize the technology.
4. Physical Currency Is Getting Closer to Extinction
Physical currency is becoming more and more obsolete. Online banking and credit cards make it easy to avoid using cash and bitcoin as a digital currency makes traveling easier as monetary value is not getting lost in the exchange rate. While many people and companies are wary of using bitcoin, the fact remains that digital currency is where finance is heading. Basically, Bitcoin has proven that “currency no longer needs a government backer to exist or work in the financial world” according to Daniel Newman who provides digital transformation expertise to Forbes and Entrepreneur. FinTech will continue to make strides in the digital sector of the financial marketplace, meaning physical currency is getting closer to extinction.
5. Enhanced Security Is Top-of-Mind
The digital age is creating a problem of digital scams, identity theft and fraud as people have learned how to hack accounts and steal identities. Using digital technologies that are proven to be secure to protect people from these scams are the future of where the financial marketplace is heading to for the well-being of consumers and investors. Financial advisors are even beginning to use virtual reality to help clients understand financial options and increase their understanding and awareness of how everything works.
After the recession and financial collapse of 2007, many people lost trust in banking institutions. Technology like Blockchain is making transactions more secure, so you can have peace of mind when buying, selling or trading anything of value. The removal of the middle-man is also helping to remove the temptation to take some of the profits from the transactions.
How Can You Prepare Yourself for the Future of Finance?
A combination of expert financial advice, online research and technology is ideal for investors to have a financial professional’s advice as well as a general knowledge about investments and the financial marketplace. Find a financial advisor today to help secure a positive financial future.