5 Trends Shaping Digital Transformation In Financial Services + Guide

Consequently, it has now become a business strategy as opposed to a technology strategy. Digital transformation in finance is the reorganising and reshaping of finance and accounting function using technology to recreate efficient operating systems and processes without replacing traditional systems. Prasanth Nair is known for driving business transformation initiatives by leveraging analytics & data science to help solve real-world business problems. With 16+ years of experience, Prasanth assists global businesses to reinvent their approach through digital and cutting-edge technologies. AI undeniably reduces cybercrime by protecting mobile banking, login credentials, and much more.

While some companies have digital transformation in their DNA, quite a few need to watch out for industry trends, pick up the ropes, and keep pace with the industry. In the meantime, there is a pressing need for C-level leaders to be agile and look out for key trends in 2023 and beyond to drive the businesses of tomorrow. If you’re in finance, you’ve surely heard all sorts about how technology, AI, and automation are impacting finance functions around the world.

Digital Transformation Defined

A successful digital transformation requires thorough planning to help every member of an organization discover the benefits of a new digital strategy. The industry also leverages blockchain technology for secure payments, identity management, and smart contracts. This technology enables real-time transaction processing, faster settlement times, improved customer experience, and increased data accuracy. The purpose of digital transformation is to offer customers improved efficiency and consistent user experience across platforms. Traditional banks and enterprises find this hard to achieve because it requires extensive research, time, strategy, and marketing to offer the right choices to customers. The finance industry handles highly sensitive customer data and third-party information.

But an authentic digital business is not just about adding on a few more bits of software to exist. It requires a complete rewiring of processes that may have been established in an organization for years or even decades. A survey from Finder, the UK credit agency, estimated that nearly 20% of people could switch to online-only bank accounts by 2027. The businesses in the financial services sector that don’t keep up with demand risk missing out on a significant part of the market. A large digital transformation project might include a complete overhaul of IT infrastructure, customer and employee management systems, and a whole raft of policies about data security. On the other hand, a small company may simply be grateful for automated processes at key points in its supply chain.

Digital disruption in finance

To increase agility and resilience and improve customer experiences in the years ahead. Financial service providers alone have invested $552 million in blockchain technology. FinTech will no longer have an ephemeral presence in the future of the financial industry. All financial institutions are moving forward and openly embracing FinTech and view it as an amazing investment. For Finance transformation, there is a plethora of legal, internal control, security, and Audit requirements that need compliance. We need to assess the system architecture and technology platform best suited for this transformation.

Technology is no longer a choice but a business imperative and so is Digital Transformation. Digital Transformation is a structured approach to help you meet the challenges and reap the rewards in a fast-changing market. Improving customer experience digital financial transformation may be top of mind for most financial services institutions, but equally important is cultivating a strong employee culture. Digital transformation is less about revolutionary technology than it is about changing the way companies work.

Robotic Process Automation (RPA) to Improve Accuracy

Maximize working capital with the only unified platform for collecting cash, providing credit, and understanding cash flow. Transform your accounts receivable processes with intelligent AR automation that delivers value across your business. Increase accuracy and efficiency across your account reconciliation process and produce timely and accurate financial statements. Drive accuracy in the financial close by providing a streamlined method to substantiate your balance sheet.

Another important strategy that is gaining traction is zero trust architecture or zero-trust security model. The core idea behind it is “never trust, always verify“, which means that devices should never be trusted by default, even if they are linked to a managed corporate network and have been confirmed earlier. It helps prevent data breaches https://globalcloudteam.com/ by eliminating the concept of trust from network architecture. Detection of fraudulent claims, a huge problem for insurance companies – the total cost of insurance fraud (non-health insurance) is more than $40 billion a year. Predictive analytics helps to detect fraudulent activities, suspicious claims, and behavioral patterns.

Why Finance Digitalization Matters to Financial Services organizations

Global and regional advisory and consulting firms bring deep finance domain expertise, process transformation leadership, and shared passion for customer value creation to our joint customers. Our consulting partners help guide large enterprise and midsize organizations undergoing digital transformation by maximizing and accelerating value from BlackLine’s solutions. Many investment banks and wealth management companies are experimenting with voice biometrics to increase security and client experience during phone transactions. Some trends that we’ve already listed above like cloud adoption, process automation, APIs, and improved customer experience are also relevant for the investment sector. There are pure BaaS providers, FinTech companies that propose BaaS functionality, and traditional banks that open their banking infrastructure and licenses to other FinTech players by means of APIs.

Timely, reliable data is critical for decision-making and reporting throughout the M&A lifecycle. Without accurate information, organizations risk making poor business decisions, paying too much, issuing inaccurate financial statements, and other errors. F&A teams have embraced their expanding roles, but unprecedented demand for their time coupled with traditional manual processes make it difficult for F&A to execute effectively. Centralize, streamline, and automate end-to-end intercompany operations with global billing, payment, and automated reconciliation capabilities that provide speed and accuracy. Ignite staff efficiency and advance your business to more profitable growth.

Artificial Intelligence (AI) for Credit Risk Management in Banking

Freeing up their time so they may focus on work that showcases their value comes with its advantages. The reward of digitally transforming your business is a workforce that is more productive, more effective, and more satisfied. In other words, financial organizations must ensure they are adequately preparing for the future with a digital transformation strategy that makes them ready for technological change. DeFi comes with several risks that are unfamiliar to traditional banking methods. After all, this system is contingent on consistent internet availability, largely untested, and primarily unregulated.

• In fact, IBM’s CEO sees immense potential in Blockchain and says it would transform the world if adopted widely.
• BlackLine is a high-growth, SaaS business that is transforming and modernizing the way finance and accounting departments operate.
• The benefits are more revenue and more growth—and the ability to stay ahead of the curve.
• The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets.
• When it comes to IT spending, a study highlighted that 58 percent of financial service providers reported a year-on-year increase in IT budget, which will continue to rise.
• Business leaders currently estimate a higher revenue growth than their closest competitors.