Professionals in the Financial Service industry are coping with an increasingly wide array of complex business processes. On top of this, they are dealing with an increasingly fast-paced technology boom. In order to succeed in this highly competitive industry, professionals need to stay on top of the latest trends that are hitting the industry. To stay relevant, it is more important than ever before to embrace digital transformation and new ways of doing work.
Blockchain and Cryptocurrency
Just a few years ago, cryptocurrency seemed like a phase but blockchain and cryptocurrency are here to stay!
An initial public statement on crypto assets was issued by South African authorities in 2014. However, due to the growing interest and rapid innovation in the financial technology The Financial Intelligence Centre (FIC), Financial Sector Conduct Authority (FSCA), National Treasury (NT), South African Revenue Service (SARS) and the South African Reserve Bank (SARB) as part of the Intergovernmental Fintech Working Group (IFWG) released a consultation paper on crypto assets at the beginning of 2019. It highlighted the benefits and risks of the related activities, reviews the approaches by other jurisdictions, and presents recommendations for dealing with crypto assets from a South African perspective.
As regulators get more involved in the industry, we can expect greater use cases of this technology. Some areas where increased activity can be anticipated are peer-to-peer lending and micro-insurance.
Interestingly enough, the technology behind cryptocurrencies – blockchain – will prove to be highly valuable security feature within the financial services sector. We can expect it to be increasingly adopted in areas where valuable information is being exchanged like digital payments, escrow services, and loan processing.
Mobile Mobile Mobile
The mobile trend shows no signs of slowing down. Everything in the financial services sector is going mobile. In the current digital economy, it is essential to optimise your processes and customers services for mobile. Most of us are already able to make payments, deposit and transfer funds, and apply for loans from the convenience of our phones. So the competition is to create a mobile app that is the simplest and easiest to use.
Interestingly, the move towards the mobile is also touching third-party financial service providers who are now competing with banks in the financial space. Third parties like unconventional lenders, financial managers, or simple financial budgeting apps. Traditional industry leaders need to consider how they integrate with these third-party services and which of the services they may be able to offer to their customers directly.
The focus for the financial industry is increasingly customer-centric services from 24/7 access, easy-to-use apps, or a new focus on mobile pay. Digital, specifically mobile, payments are set to be the new normal.
The Intergovernmental Fintech Working Group (IFWG) is expected to publish an updated regulatory framework for the fintech industry in the coming months to gauge the need for regulatory sandboxes. This is an encouraging trend for the industry trying to navigate the muddy waters of regulation in South Africa.
Regulatory sandboxes are frameworks set up by the regulators that allow innovators and industry leaders to conduct live experiments like testing new business models and technologies, in a controlled environment under the supervision of the regulator. This means the industry can get regulatory relief and support to navigate the constantly changing regulatory requirements. Sandboxes are also beneficial for the regulators in gaining greater visibility as to customer experiences and the most suitable regulations to implement guided by hard data.
In the gig economy, data is everything. The trend here is machine learning. Businesses increasingly need to make use of automation tools like cloud-based ERP systems, to quickly and accurately process data. To keep pace with the current regulatory and digital requirements, the financial services industry needs to extract optimal value from their data in order to better serve customers, save money, save time, and even make money more efficiently.
Financial institutions and service providers need to capitalise on the digital transformation trends to be successful and compete in the current environment. Businesses that remain stagnant and attached to traditional systems and ways of thinking are sure to fail. Successful financial services professionals are prioritising data and the insights they can gain from organised and accessible data. Further, the digital focus on cryptocurrency and mobile integration is the new normal and will increasingly be a point of competition between businesses.
Find out how to take advantage of these trends and more to catapult your financial services business into the future.
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