By Alfredo Rubina, managing director and VP of Financial Services at SoftServe
Twenty years ago, during the internet revolution, we saw many new services, products and companies emerge, and others disappear. Now, we are in the digital age and another revolution is underway. A revolution that will change the landscape of the financial services sector more than ever. Financial institutions need to adapt to this much faster pace of change. Services, products and technologies that were new and useful yesterday will not necessarily be so tomorrow.
I am in constant dialogue with customers and partners to understand what business trends, challenges and opportunities the industry is facing today and in the future. Technology and innovation then become tools to address these challenges and seize the opportunities that help the industry succeed.
The application of artificial intelligence and machine learning (AI/ML), cloud, security and blockchain technologies will be increasingly used to achieve hyper-automation, hyper-personalization and a new level of customer experience, engagement and interaction, among others. Other innovations we should expect to see at the forefront in 2022 are in the areas of robotic process automation, digital-only banking, payments, financial inclusion and sustainable investments. Furthermore, security will continue to play a central role this year.
Hyper-automation combines capabilities such as AI, machine learning, process mining, process automation and API integration to replace a high degree of complexity in back-end operations and customer service with end-to-end automation. Both will be heavily used in the coming years by companies looking to automate their services, create better solutions and increase their overall capacity. AI-powered modules, for example, can quickly analyze data and draw conclusions based on facts rather than industry biases, allowing lenders to offer tailored loan rates.
With the pandemic raging for the past two years, financial services providers should redefine their service and product offerings to create value-added, personalized, cross-channel and proactive user experiences that focus on the overall financial health, needs and behaviors of their customers – not just product requirements.
This will continue to determine how companies design the customer journey in 2022 and beyond. Achieving this level of personalization requires a data and technology infrastructure that enables real-time insights from vast amounts of data streams from a variety of structured and unstructured data sources. Data and analytics, supported by AI, will enable personalized, contextual interactions across the customer lifecycle. It’s time to completely redefine the customer experience.
Thanks to the potential of cloud technology and its evident benefits, more and more financial firms are moving to the cloud. This is bringing more agility to global operations and giving employees more options to access work systems from anywhere. It’s important to truly understand the technology and how it can impact the business. One should avoid the mistakes of implementing transformation processes and cloud adoption programs without knowing exactly how they will positively impact the business. Knowing this should help inform decisions regarding which cloud model to adopt – single cloud, hybrid-cloud, multi-cloud, etc.
A lot is happening in the payments space due to the pandemic and the resulting shift from retail shops to internet/online shopping. For instance, today’s customer expects the payment process to be integrated into the shopping process and not split into two steps. Checkout solutions that include new payment methods such as points redemption, stored value and deferred payment alternatives would be implemented in the customer experience. Contactless payments and QR code payments are also catching on. It is important to expand corresponding offers in 2022.
The shift to digital channels has significantly increased the attack surface and the number of endpoints that need to be secured. Therefore, security, risk and compliance will continue to be key issues in 2022. Ransomware attacks on banks increased by an incredible 1,318% in 2021. At the same time, fraud increased by 238% and data breaches are on the rise. The financial sector had the second most expensive data breaches of any industry in 2021, having lost an average of $5.72 million to data breaches.
Financial inclusion is not only about covering ‘unbanked’ areas and engaging these customers but also about making existing customers more financially literate. Good management of our finances (loans, savings, investments, etc.) can determine whether we can achieve a secure financial future. Financial institutions should use new technologies and innovation to educate, guide and advise customers on these issues so that they can take control of their future.
For a long time, sustainable investing was considered a niche area for a small, mainly environmentally conscious clientele, but has since arrived in the middle of society and is becoming one of the most important global trends in asset management. In 2022, this will be a topic that the financial industry will have to address and use technology to offer sustainable products and services and to enable customers to make informed decisions.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.