Coronavirus will accelerate the fintech revolution
The onset of the coronavirus pandemic and the blockade measures that were subsequently introduced forced the offices and bank branches to close. In doing so, it meant that both financial services companies and their clients had to rely on digital solutions instead.
A recent survey of over 2,000 British adults made this point. It found that 66% of people used financial technology on a regular basis between March and July 2020 – an increase of more than 50% from the 2019 usage figures.
It is obvious that technology will play a bigger role when the physical world has been cut off from us. However, there are likely to be broader and more lasting consequences of this trend.
Coronavirus has spurred digital transformation in finance
COVID-19 will greatly accelerate the so-called “fintech revolution”. In many cases, what we have experienced in 2020 will prompt financial services firms to implement more sophisticated technologies and, most importantly, to migrate from legacy IT systems to cloud-based platforms. At the same time, the pandemic has evidently encouraged many more consumers and businesses to use digital solutions instead of traditional offline processes; a trend that will not be reversed even if the virus is kept in check.
After all, it is unlikely that anyone has become accustomed to managing their financial affairs or securing new financial products from the comfort of their own home during the lockout. rushing to queue at a bank branch or waiting on the phone for the same result. As we are often told, there is a “new normal”.
Some financial firms are already in a good position to serve customers in this “new normal”, largely due to the fact that they had already developed or adopted advanced technologies. Others, meanwhile, are racing to adapt.
How Financial Services Can Embrace New Technology
Financial services providers must, if not already done so, recognize the importance of cloud native technologies.
For banks, moving their IT infrastructure from local servers to the cloud allows a multitude of processes – be it onboarding, credit checks, opening new accounts or communication between bank and customer – to become much simpler. Additionally, cloud-based financial technology is naturally more scalable, which means it can handle periods of high demand without downtime.
Migrating to the cloud also ensures professionals have easy access to the critical data and systems they need for their businesses. Alternatively, forcing such groups to interact with local servers and legacy technologies not only risks COVID-19 contagion, but reflects a lack of innovation within a company’s operations.
Once this first step is completed, it becomes easier to incorporate other aspects of fintech on a cloud platform.
Why interoperability is crucial
To date, many financial companies have taken a somewhat piecemeal approach to financial technology.
This is common because fintech startups are predominantly focused on solving a single problem; have developed their products to provide specific solutions to specific problems. However, having the best identity verification software or product recommendation algorithms won’t mean much if the consumer is then unable, for example, to take out a new loan without a lengthy exchange with a staff member .
Interoperable fintech technology built on a cloud platform is key to delivering a great end-user experience; This is why the most successful financial service providers put interoperability between technologies at the heart of their digital transformation. For example, there are already some credit markets in the UK that have fully digitized their pre-approved loan services, which means that a loan can be secured in just a few clicks.
Positively, some quarters of the financial sector are already realizing that the sector needs to develop entire systems rather than autonomous technologies if a “fintech revolution” is to be properly implemented. The survey above showed that, during the lockdown, 21% of British adults secured new financial products without speaking to a single human (be it a credit card, overdraft, loan or something else). other).
The cloud remains a necessity here, as it allows a company to interact with all of its technologies from a single location, which can be accessed anywhere.
Why finance must move with the times to survive
COVID-19 illustrated the absolute need to form the right partnerships to create technologies that seamlessly connect different bank accounts, products and services.
In the end, the lockdown only accelerated a trend that was already taking hold, with customers expecting more and more from digital banking. As such, the quality of a financial company’s digital offerings has become, and will remain, an important differentiator between competitors.
Indeed, when asked whether the quality of a bank’s financial technology is an important factor in deciding whether or not to go with them, nearly half (47%) of respondents said yes. Expect this number to increase in the months to come.
Financial firms need to recognize this and learn lessons from the pandemic so far. Progressive choices are needed and the advantage will lie with those companies that do the best.