How are financial services handling digitization during the pandemic?

coins on paper

During the pandemic, the importance of digital processes and transactions has never been made increasingly clear. As the world stayed inside their homes and many businesses temporarily closed their brick-and-mortar shops, providing digital options for payments, products, and services soon became the norm. From delivery services, video appointments, and online banking, the business world adapted to the change. They continued their operations, albeit from an entirely different platform than most are used to.

While before, our reliance on technology would be met with admonishment and maybe even scorn, particularly from the older generation, now our reliance on technology has never been more important. With so many people, consumers, and business owners alike, now having to turn to technology and the internet to survive, technological innovations and digitization has become everyone’s number one priority.

Like many other industries and businesses, financial services have had to adapt to the rapid digitization of the modern age. With most clients now preferring the convenience and safety of online transactions, even the finance industry has no choice but to transform the way they conduct business altogether. But just what sort of transformations and innovations have financial services been making throughout this pandemic?

Online banking

Most online shopping transactions these days are made through online payment methods. Paying through an online bank or online cash transfer apps has become the preferred method of online shops and businesses. The use of mobile cash apps and online payments skyrocketed in the past year, quickly putting face-to-face transactions and ATM withdrawals to shame.

Indeed, many predict that in a few years, banking will be done entirely contactless and cashless. By then, practically any transaction you can think of, including paying off your mortgage and utility bills, could all be done without needing to ever leave your house. Some even predict that physical banks could disappear completely as digital options become more prevalent. As with everything else, this could transform the way we pay and conduct business altogether.

people writing code

Updating legacy systems

With plenty of businesses now fully digitizing everything from their filing system to customer service, updating old legacy systems that have been in use for years, even decades, has become a priority for most financial services. This, of course, comes with its own set of challenges. Some companies, especially those using the same system for many years, might find a steep learning curve with newer cloud-based systems. Others might be stalwart and stubborn and insist on using a familiar set-up rather than adapt to the newer change.

Whatever the case, the implementation of better systems that make the most out of the cloud and the internet has still streamlined many operations and transactions. While others might be opposed to the change at first, they’ll quickly realize the efficiency of a newer system, and if not, they run the risk of getting left behind by the times.

Fintech, AI, and automation

Fintech, or financial technology, is the overarching term for technological innovations and advancements to improve and compete with traditional financial services. Start-ups and existing businesses alike have been putting greater importance on fintech and its many innovations.

The use of AI, for example, has become more common in many businesses. AI can be used for advertising, organizing, and analyzing data and for customer service. Nowadays, when you go to online sites, chatbots run by AI will respond to any questions or concerns you might have or direct you to someone who can answer them.

Business automation is another advantage in using AI, as it automatically performs repetitive tasks to allow employees and business owners more time to focus on other important tasks. As the shift towards digitization becomes all the more necessary, so too is fintech rapidly becoming the norm. Businesses that offer lending services and loans have started turning to fintech to give their customers smoother and safer transactions.

AI-based tech could streamline many operations for the insurance industry, such as reducing the risk of fraud and processing claims. While there is the challenge of making the switch from older systems, it is nevertheless an essential part of digital transformation.

Digitizing old, stable, and once-reliable systems always challenges many companies and businesses, regardless of the industry. However, many will find that adapting to the times rather than pushing against them will bring about a much larger and much more appreciated change in business operations and customer satisfaction. Especially during the pandemic, where remote working and transactions prevail, digital transformation is no longer just an option but a necessity.

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