More than ever, the financial services industry is exposed to massive breach and threat from cybersecurity. The threat of personal and financial data theft, as well as misuse of the data, holds the biggest challenge for the financial industry in an ever digitalising world.
At Global Tech Innovation, we have been looking closely at the digitalization of the financial services industry; various perks and paybacks brought by the digitalization as well as the cybersecurity threat pose by the technology. It is however, to be noted that most of the most digital-savvy financial institutions are able to amass great success by implementing best practices.
So, is the digitalization of financial services a threat or an opportunity for the financial services industry?
In all honesty, the digitalization of Financial Services presents both opportunities and challenges and it’s up to the industry to tackle those challenges and leverage off the opportunities. At the end, it all comes down to the individual institute, how it tackles the tech gap and leverage on the technology for greater success.
Here are some of the digital components of the financial services industry that we at Global Tech Innovation believe is revolutionizing the industry:
1. Online Payments
Banking industry most definitely has the most impacted industries from the tech revolution and the rise of online banking is at the forefront of the impacts.
Adapting to the online payments had been a costly venture for the industry as it needed large investments being made into the IT system upgradation, however, that investment has paid off greatly as it lowers the per unit transaction cost for the banks as well as for the consumer. Today, the young entrepreneurs are largely bypassing the traditional banking channels altogether; opting for the online industry solely as their preferred transaction model.
2. Tracker Funds
Tracker funds have proved to be detrimental to success in asset and wealth management businesses. The rise of tracker funds that attributed radically low per unit costs as well as the enormous scale has drawn in massive attraction from the general public, so much so that the old debate for “active Vs Passive” investment strategies have been reignited.
3. The Robo-Advisors
To be honest, while the financial services industry has undergone much to adapt to the rising tech, much is still left to be done to be able to meet customers’ massive expectations from the industry.
Consumers today are all in for convenient and highly-functional financial systems that enable them a restriction free 24/7 access to their accounts from all tech channels including desktop, laptop, and mobile devices. To further complicate the list of expectations, they want a secure and encrypted platform that can provide them a sense of security and protection against the digital threats and to top off of this, they want all of these features without any upward cost. Believe me, the consumers’ preference to spending has changed drastically and today they either aren’t ready to pay at all or at most very little cost for financial advice (thanks to tech-driven access to expert forums). This has led to the rise of “Robo-Advisors”, who are entitled offer guidance (not literally advice but guidance) to users on financial management at very low cost. While still in early days, it is one area where financial institutes need to invest to stay at par with users’ preferences.