Exploring technological challenges facing the finance industry
Digitalisation is one of the paths chosen in all economic sectors to increase productivity. Technology reduces operating costs and reduces human intervention in repetitive processes by increasing reliability and the efficiency of companies.
Digitalisation has created many new business opportunities within the fintech industry. For example, innovative fintech entrepreneurs can compete with established financial institutions for market share by reducing intermediation and centralisation costs. Fintech companies are also empowered to improve traditional user experiences offered by banking institutions. In turn, they can capture a new generation of customers including digital natives.
Going Digital: Not all tech is equal
Technology is at the core of the fintech world, enabling solutions and services. However, technology is a very broad concept: from the everyday sending of an email, through to providing an artificial intelligence algorithm for risk assessment of complex financial services.
Fintech companies that make technology their differential value are the ones that more often obtain better results than traditional banks. For other technological services which are not part of the fintech’s core business, they should leverage relationships with suppliers and partners. Fintech companies should concentrate on adding value to their end users by focusing their resources on the actual problem they solve.
I have worked with many fintech organisations over the years, and in my opinion, there are two services that both Fintech and traditional banking need to outsource to suppliers: security and mobile communications.
Security in the financial industry
Security is built with a layered approach. Layer upon layer of security is added to minimise the chances of a digital fraudster committing a crime. If someone can get past one layer, they will encounter the next layer without achieving success.
It is clear that the core layers of security for this industry must be within the core technology of the financial institution. However, there are certain security layers that can be added with the help of vendors, adding more security, and making it more difficult for potential fraudsters.
These anti-fraud measures mean minimal friction for the end user and a negligible cost for banks and fintech companies compared to the fraud risk they avoid.
The second group of technologies where a fintech company can rely on suppliers is communications. Although it is not their core business, communication with end users is a huge part of daily business for the financial industry.
The first reason to use a CPaaS (Communication platform as a service) provider in the financial sector is to lower costs through optimisation of communication.
Secondly and more importantly, a CPaaS provider can help the financial industry improve the perception and engagement of its users on new conversational channels like WhatsApp.
A key factor disrupting the fintech industry has been the improvements made to the user experience versus traditional banking that eliminates unnecessary friction. Fintech companies that already have strong UX experts designated to web or email should also pay close attention to boosting their conversational channels, allowing users to communicate on their channel of choice, sometimes even 24/7. A CPaaS provider can help to orchestrate the right conversational experience for their end users.
LINK: Shifting customer expectations
Choosing a technology provider in the financial industry is not all about price. In my experience, security and trust are key components when scouting potential suppliers.
When it comes to security and communications, LINK Mobility is the natural choice as a CPaaS provider due to its global reach and local presence, in addition to its wide portfolio of satisfied customers. For more information on our financial services product reach out to us today.