FinTech is a booming industry that leverages some of the most cutting-edge software available. If you work in the financial services industry, this article should help you identify some high-value tech upgrades that you can make right now.
Common Technical Challenges for Finance Companies
Your finance team has an important role to play in leveraging data to analyze different aspects of your business, like products, inventories, and customers. The advent of big data, machine learning, cloud computing, and advanced mobile technology plays a pivotal role in the way finance professionals operate today.
However, if your finance team is not keeping up with the ever-evolving tech scene, it can pose a major problem for your business in terms of revenue and output. Here are some common technical challenges that the financial services sector often encounters.
Clunky or outdated legacy technology
Is your legacy technology slowing you down? Is your team investing more time in “dealing” with systems provided instead of actually performing tasks? If you answered yes to these questions, then it's time for an upgrade. Improved processing power in hardware systems and up-to-date software versions can help perform tasks more efficiently and quickly.
Huge amounts of manual documentation
Smart software solutions can easily take away or even reduce the time invested in manually documenting the details of financial records. What does your team do if you have financial records to be maintained in the system for 200+ clients? If the answer is manually entering every detail, then your firm is investing its time in the wrong tasks.
Lack of websites or apps for connecting with customers
Does your business use the same old way of connecting to customers via phone lines? It can get frustrating for customers to be kept on hold until a human agent is available to attend to their query or complaint. A website or an app is available 24/7 for the customer to use at their own time. Plus, smart chatbots added to the website or app can be the first point of contact for your clients to raise a request, answer a query, make a purchase, give feedback, and more!
Insufficient predictive analytics for financial markets
Financial professionals no longer have to "crunch numbers" to come up with sufficient market analysis. Artificial intelligence can do that for you! Often, labor-intensive manual analysis can turn out to have errors – meaning that your company invested its time and capital in a fruitless task. If this sounds familiar to you, it's time to move on to an automated solution.
Vendor lock-in to proprietary platforms
With on-premise server maintenance and cloud platforms like AWS, Google, and Microsoft, if a vendor’s quality of service declines or they change their product offerings in such a way that it no longer meets your business needs, your business may be “locked-in”. A good alternative to proprietary tools is storing all your data in open-source formats on the cloud or opting for an enterprise AI platform that enables a seamless cloud integration with preferred cloud hosting providers.
Tech Needs by Financial Sub-Sector
Every sub-sector within the financial domain has a different set of objectives to address. The way technology is used across these sectors varies, and so do the associated challenges.
In this sub-sector, the main challenges include using the right technology to improve operating efficiency while maintaining transparent processes. Technology can help to simplify and elevate the client experience while reducing risks.
This sector relies on tech to provide high-level automation via robotic process automation (RPA), machine learning (ML), artificial intelligence (AI), and data analytics. The greatest area of need here is streamlining existing processes and eliminating those processes that are redundant or low-impact.
The greatest technological are of need for financial advisors is using technology to build long-term client relationships. Technology can provide personalized and relevant customer experiences by helping customers monitor their investments and financial portfolios in real-time. Easy-to-use apps and platforms need to be developed to provide a holistic customer experience.
Technology can help with rapidly changing business models and reduce the infrastructure complexity of present models. There is also a necessity for a seamless omni-channel experience to improve the flexibility and resilience of wealth management systems.
Technology can help VCs drive faster product development while introducing innovation within their market. The challenge here is to provide automated analysis to judge the feasibility and profitability of new products and business models. Technology has to be used in the right way for tracking profits, internal processes, and KPIs.
Artificial intelligence, machine learning, predictive analytics, and live chat can streamline operations and customer interactions while providing a seamless customer experience.
High-level automation can help accountants reduce repetitive tasks and focus on productivity instead. Digitization of audit processes can increase security, chatbots can be used to efficiently solve customer queries, and AI-powered machines can alert humans when a possible breach has occurred.
6 Tech Upgrades That Finance Teams Can Implement Right Now
Technology can create a cohesive ecosystem of digital systems, applications, customer experience platforms, infrastructure, and tools that help increase ROI, streamline operations, and deliver a better experience for employees or clients.
The adoption of cloud technology can improve the flexibility and scalability of financial management systems. It can improve collaboration between cross-functional teams while developing and launching new products and services. In terms of digital security, cloud-based technologies can be used to set up a strong infrastructure and process transactions reliably.
Examples: AWS, Microsoft Azure – The latter offers security tools built for financial organizations to meet industry-specific regulatory requirements.
Upgrading or Replacing Legacy Tech
Legacy technology can be redesigned or replaced to eliminate inefficiencies. The cost of maintaining legacy technology typically outweighs its value. These systems may often crash, and they require constant attention from the IT department. They are extremely vulnerable to attack and have major security concerns. Additionally, most legacy systems are incompatible with new-age systems and modern tech upgrades.
Example: Languages like VisualBasic, mainframes, and operating systems like Windows XP
Switching to Free or Open-Source Tools
Open source tools with a documented codebase can help the finance sector explore and innovate with new technologies. Moreover, they can help save capital in licensing costs for a particular tool. They come with a host of functionalities and cover almost every disadvantage of legacy tech like security patches, updates, and compatibility issues.
Example: Languages like Java, Node.js, Python, operating systems like Linux, and word processing software like LibreOffice.
Machine Learning and Predictive Analytics
AI/ML can help the finance sector by automating repetitive processes that take up productive time and the company’s capital. Human employees can thereby perform value-added tasks.
Machine learning and predictive analysis can also help with customer-centric personalization. Insights received through predictive analysis can shape personalized customer services. Additionally, predictive analytics tools can detect minute differences in transactions to understand their legitimacy
Example: Teradata’s analytics platform has fraud detection capabilities and can alert the team at the bank for anomalies in transactions.
Core processes that can be automated in this industry include booking entries, consolidating and validating budget reports, gathering and cleaning data for analysis, transaction audits, highlighting timesheet errors, generating invoices, and completing audits.
Example: UiPath robots automate invoice processing, process customer forms, aggregate invoice data, and trigger invoices on sales orders and goods receipts.
Cyber attacks against financial firms are becoming more frequent and more sophisticated. Dynamic security solutions backed by powerful technology can keep cybercriminals at bay. Vulnerability scanning software, advanced firewall solutions, security log trackers, and evaluating the authenticity of transactions are a few approaches that the financial sector should undertake to enhance security.
Example: CISCO provides a host of tools for the overall security of different domains in the financial sector.
Technology can structure payment infrastructures to cater to instant payment options. Mobile apps can now be leveraged to make a host of payments either to businesses or to transfer funds internally. This allows the company to offer the rapid transaction speeds expected by consumers and add to the overall element of customer satisfaction.
Example: Stripe, Amazon Payments, Google Wallet, etc.
Comparing Individual Solutions for Maximum Savings
A comparison of the following factors should be done to get clarity on savings in tech solutions:
- Subscription or per-seat costs of tools and technologies employed
- Cost of implementation/maintenance of tools deployed
- Compatibility across products/solutions to ensure that multiple teams are benefitting from the tech
- Accessibility for all employees/customers to avoid bottlenecks in role-based tools
- Regulatory compliance
Tracking the Impact of a Newly Adopted FinTech Solution
After upgrading your IT infrastructure, you'll want to monitor the changes you made for their impact. Here are some ways to get a sense of ROI on tech improvements.
- Track feedback from your customers: Have they noticed a change in the way your teams are dealing with them? Are transactions faster, more secure, or more efficient now that a tool has been deployed? Are they comfortable using the tool?
- Track feedback from your employees: Are they now spending time doing productive tasks? Has technology introduced a smoother way of working?
- Track your lead generation: If your business is now contracting more leads as compared to before, has technology played a role in this?
- Check customer loyalty and retention rates: How has the technology you deployed played a role in this?
- Track website and app traffic: Invest in data analysis tools that will help you track progress in real-time and for a longer duration. The information gathered will enable you to understand whether the tech upgrade was successful after 6 months or a year. Additionally, business-related KPIs can be monitored to understand the same.
The financial sector is actively pursuing technological upgrades to enable enterprise agility, innovation, security, and operational efficiency.
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