5 Most Impactful Digital Transformation Trends in Finance

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5 Most Impactful Digital Transformation Trends in Finance

It’s clear that the financial services industry is experiencing digital transformation. Driving that transformation is a series of trends that incentivizes banks to change. Consumers no longer want the same old experience; they want convenient, secure solutions that meet their banking needs. These five digital transformation trends will encourage banks to improve their digital capabilities and advance into a new era of banking.

1) Blockchain

2017 has been the year of the blockchain. For the uninitiated, blockchain refers to a digital ledger in which transactions are recorded chronologically and publicly. The blockchain is so attractive to banks because it offers transparency, security and lowers transaction costs. Banks are working to increase the effectiveness of peer-to-peer (P2P) payments, and the blockchain can be the foundation of that system.

Blockchain-based technologies are driving digital transformation in banking by offering the possibility of an entirely transparent ledger of transactions. The blockchain can make it easier for consumers to transfer assets between each other. Blockchain-based systems can add a layer to security to P2P payment and lending systems, a feature that is already popular with consumers.

By adding a layer of reliability to P2P payment systems using blockchain, banks can increase consumers confidence in their ability to deliver branchless banking.

2) Branchless Banking

While some customers enjoy using branches to meet their banking needs, an ever-increasing portion of the population wants to be able to handle all their banking without ever stepping in a branch. In fact, over 40% of consumers have not used a bank branch in the past six months.

Consumers want to do their banking without having to go to a branch, and digital transformation is the cause. Many people have become used to shopping online, watching TV online and using the internet for nearly every transaction they need to make. Banks are no exception. They need to offer a high-quality, secure, branchless experience to keep their customers satisfied.

Features such as online personal banking, offering the ability to sign up for services online and digital peer-to-peer payment systems will allow consumers to forego using a branch while still being able to meet their banking needs. The blockchain is one new feature that can facilitate branchless banking.

3) New Features

Once upon a time, debit cards were a new, innovative feature that could be used to excite customers. Today, those same debit cards are being phased out for more convenient payment systems. If a bank does not continually develop new features, consumers will look to FinTech challengers to scratch their itch for innovation.

Developing new capabilities, such as online banking, P2P payments or building an app has changed the way that banks interact with customers. The status quo changes quickly, and what is fresh and innovative in 2017 will one day be considered outdated.

An essential feature of digital transformation is the drive to continually innovate and improve the customer experience using technology solutions. This continual innovation will lead to more fundamental changes that shake the banking industry to its core. The innovation caused by digital transformation may alter aspects of financial services that were once thought to be immune to change.

4) Cashless Transactions

Cash currencies are becoming less common in societies all across the world. The process of states transitioning from cash to digital currencies has already begun. On November 8th, 2016, India announced a recall of over 80% of the country’s currency, something that wouldn’t be possible unless the move to digital transactions had already begun. Thanks to the growing ubiquity of digital payment apps, online banking, and P2P lending platforms, cash has lost much of its usefulness.

Paper currency is on its way out, thanks to technologies such as blockchain ledgers and P2P payment systems. To many, carrying cash is an annoyance, and even the smallest transactions are conducted with a credit or debit card. In the future, cash will have no place in any developed society. It’s time for banks to implement digital payment systems that require nothing but a smartphone. One day, even cards will be considered a nuisance.

The future of transactions lies in peer-to-peer payment systems. Nobody wants to have to find an ATM just to get cash so they can pay their friend back for lunch. If you cannot provide this digital feature, customers will lose patience.

5) Enhanced Security

All consumers need to be aware of online security threats. Recent, high-profile examples of cybercrime have contributed to some individuals being skeptical of any digital technology. Even well-known companies who are digital natives such as Amazon, Google, and Facebook have to deal with these concerns. Consumers want to ensure their data is safe, especially when the data contains sensitive information that a bank might need.

Banks need to develop security protocols that consumers can easily learn. Banks should educate their customers on things such as: The importance of protecting passwords, using secure connections, always being vigilant of potential security threats and, reporting suspicious emails and links.

By teaching customers to follow these procedures banks can build consumer trust in their bank’s security capabilities. Building that trust will motivate customers to begin their own personal digital transformation, pushing them to complete everyday transactions through digital channels.

These five digital transformation trends are not only affecting banks but the financial services industry as a whole. Financial service professionals need to adapt to what consumers want. Banks need to offer convenient service, where customers control the interaction. Most consumers have already begun to expect some level of digital mastery. Are you ready to meet their needs? Let us know on Twitter @VeridayHQ or LinkedIn. If you want to learn more about digital transformation, you can check out more of our blog posts here.

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