How can rural banks and smaller financial institutions keep pace with today's agile Fintechs?
The financial service sector is going through a huge shift. Financial technologies or Fintechs have stolen the scene with their advanced services. Rural banks and smaller financial institutions need to adapt if they want to keep up with the competition.
Luckily, financial services technology is now far more accessible to smaller players. There are plenty of solutions in the market that make it possible for you to digitize in the next three years, or even in the next months.
Here are five of the latest technology trends for financial services in 2020 and beyond:
Artificial Intelligence (AI) has gone from a buzzword to just another part of our daily lives. And this is just in the course of a few years. Banks and Fintechs have been using the technology to power intelligent voice assistants or provide customers with personalized experiences. But one of the simplest applications of AI (and with most impact) is its ability to automate tasks, like chatbots.
Chatbots are revolutionizing customer service by making it easier, cheaper, and more accessible to users. Instead of being on hold for who knows how long, users can simply “talk” to a chatbot to get all their questions answered.
Most major banks and financial institutions have e-banking capabilities or a mobile banking application — and with good reason too. 69.2% of the Philippine population uses a mobile phone. They do anything from browsing the internet to shop with it. While mobile banking penetration is still low at 28%, the Bangko Sentral ng Pilipinas (BSP) is positive about the benefits of going cashless. BSP is implementing various services to promote going digital.
BSP also believes that 20% of local transactions will be digital by 2020. This means that banks and financial institutions that have not yet digitized their services need to catch up if they want to stay competitive in the future.
While the costs and time needed to create an app depend on the size and complexity of the project, it’s possible to implement one within the next six months. It can take anywhere from 20 to 30 weeks. This makes it a relatively short-term endeavor with huge future payoffs.
With the rise of mobile banking, more financial institutions have also been investing in identity authentication technologies. This protects sensitive user information. The most popular one is one-time-passwords (OTPs). However, pro fraudsters have quickly found ways to intercept OTPs and scam unknowing customers.
There are banks and financial institutions that have turned to biometric technologies. A real-time face or fingerprint scan is far more secure than a typical username and password setup. This is because it depends on a person’s unique features that can’t be duplicated. Not to mention it saves customers from having to remember complex passwords.
Ensuring the cybersecurity of personal information is important to maintain digital services. Without it, you would quickly lose the trust and loyalty of your customers. So these measures should be implemented alongside any mobile banking or e-banking plans.
Once you go digital, all the information you collect needs to go somewhere. Instead of investing in or customizing data lake stores, more banks are turning to cloud computing.
As the name suggests, cloud computing is a technology for storing and analyzing data. There are a number of service providers in the market that sell it with pay-as-you-go pricing options. That means you only need to pay for the services you actually use. Not only will this give you the flexibility of today’s Fintechs, but it will also help control costs.
Cloud computing solutions should be easy to implement as all the integration is done by the service provider.
Blockchain came into the scene as the digital ledger that made cryptocurrency possible. But its business applications didn’t stop there. Blockchain is also changing the way monetary transactions are recorded.
Instead of the usual excel sheet, manual logging, and verifying processes, all transactions are updated and confirmed in real-time. These are stored in the blockchain in an unchangeable manner. Not only does this reduce paperwork, but it also provides the highest level of transparency and security. It reduces the risk of error and fraud. Plus, it’s far cheaper to maintain as it removes an entire layer of verification.
The downside of blockchain is it needs complete digitalization of operations (both from the bank and its stakeholders) in order to work.
While the financial services sector has generally been slow when it comes to keeping up with the latest technologies, it isn’t too late yet. Things like AI, blockchain, and cloud computing are no longer exclusive to the big guns with deep pockets. There are now more affordable and accessible solutions in the market for everyone. Globe myBusiness, for example, offers cloud-based and mobility solutions to small and medium enterprises (SMEs).
Plus, governing institutions like the Bangko Sentral ng Pilipinas (BSP) are also taking steps to give incentives for digitalizing financial services.
According to Rappler, BSP is one of the most progressive regulators when it comes to promoting cashless transactions. So it wouldn’t be difficult for you to be BSP-compliant. These are some of the things that the central bank has allowed:
As the financial sector continues to shift, you can ready your financial business for the evolution by following these trends.
Learn more about Globe myBusiness solutions that will modernize your financial institution. Find out more here.
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