If you’ve ever checked your bank account on your app or made a purchase online, it’s easy to see how technology is shaping financial services today. What were once rigid industries, banking and financial services are now being shaped by emerging technologies.
One key component of this rapid change is the rise of a multi-billion-dollar disruption caused by fintech. Recent estimates from The Business Research Company estimates the global fintech space will be worth around $310 billion (HK$ 24000 billion) in 2022. While banks have always erred on the side of safety, some risks that fintech startups have taken are now paying off, giving consumers better options. That’s why banks have also begun investing in emerging technologies — revolutionizing financial services today. And here are some of the ways this revolution in financial services is helping people.
Banking the Unbanked
Last year’s Facebook Libra has sparked a conversation on inclusive banking and providing access to the so-called unbanked and low-income customers. As new tech solutions like e-wallets and digital banks have successfully catered to the millions of unbanked worldwide — around 1 million in Asia alone — big banks are following suit. The Guardian reports that around a third of banks in the UK and EU have closed brick-and-mortar branches in favour of online banking.
Inclusive Financial Services
Similarly, fintech startups have also focused on increasing access to credit and financial services. In countries like the US, credit scores impact the rates for mortgages and loans, as well as access to credit, but are usually determined by institutions like FICO. That’s why Petal Card is addressing the new-to-credit problem by using additional data points, modern technology, and financial data to mark creditworthiness. By giving creditors alternative sources for appraisal, it increases consumers’ chances at better interest rates and higher approval rates. Apps like Robinhood have also introduced investment plans with lower cost barriers and no additional fees.
Another key technology that’s disrupting the banking and financial sector are cryptocurrencies. These digital currencies are made and traded on a decentralized ledger, which means that they can increase transparency. Moreover, cryptocurrencies cut out the middlemen in financial transactions — effectively lowering costs to borrowers or users. As it happens, Europe recently announced its first bank made entirely on top of the EOS blockchain. By tokenising the financial assets such as fiat money, investments, and cryptocurrencies, the industry not only makes these more safe and secure, but it also gives owners unprecedented access to frictionless international transactions and many more.
The smart use of data generated from transactions has given rise to hyper-personalised banking. But with the advent of artificial intelligence (AI), banks now give highly targeted and relevant suggestions to end-users for loans and credit offers. By discovering patterns in your purchase behaviour, more advanced mobile banking apps can anticipate your needs and wants. It also means that the more powerful banking apps have integrated services — making finances more convenient than ever for the public.
Last year also saw the introduction and spread of chatbot services in the financial sector. By combining robotic process automation (RPA) and AI-answering machines, banks can boost end-user satisfaction. In fact, some platforms like that of Ant Financial use these chatbots and RPAs for loans and credit applications without a single human in the process, which makes transactions more secure and precise.