The world of the early third millennium is essentially a digitalized one. Moving within the mainstream of Industry 4.0, human civilization is increasingly introducing novel IT advancements into an ever-broadening number of domains – from shopping and entertainment to education and healthcare. The financial sector is no exception, employing a whole range of fintech solutions that shape the contours of digital transformation in financial services.
What Is Digital Transformation in Financial Services?
The contemporary financial industry is undergoing robust digitalization. This vibrant transformation drive has been conditioned by the rapidly evolving business landscape in the realm. The breakneck pace of modern life urges people to exploit all opportunities high-tech achievements provide to streamline and facilitate handling their finances. We quickly got used to 24/7 access to mobile payments and digital banking, budgeting and wealth management, insurance and small-ticket loans, money transfers and crowdfunding, and many other services available just in a few clicks on our smartphones or desktops.
The demand for e-services in banking and finance was considerably boosted by the vicious onslaught of the global pandemic. Being marooned in their lodgings intermittently for close on a year, 57% of people have switched over to the remote modus operandi in getting banking services – a tendency that reigns supreme practically in all spheres of our life.
Consequently, brick-and-mortar financial institutions had no other choice than to take the next normal in its stride in order not only to stay precariously afloat but to thrive, outperforming their rivals in the oversaturated and highly competitive niche. So, it is no wonder that fintech product development is on a steep rise which is only going to intensify for years to come.
Benefits of Digital Transformation Scrutinized
What do financial organizations get by going digital?
- Workflow automation. Financial operations abound in repetitive tasks. An identical routine is present in report compilation when the same data is retrieved over and over again. Software copes with this tedious toil much better and faster, freeing employees to pursue more creative activities.
- Enhanced customer experience. Digital technologies enable faster operationability and higher quality of service which reduces clients’ waiting time and increases their satisfaction, urging them to build lasting relationships with the organization.
- Data, apps, and processes consolidation. After a financial company upgrades its software and hydrates the cloud, all its data and programs get stored in one virtual venue that can be accessed at any time by all stakeholders.
- Real-time trend tracking. Today, flexibility and prompt reaction to shifting circumstances are a significant game-changer. It augments predictive capabilities and allows a venture to spot nascent tendencies or adverse developments in time to address the challenge on short notice.
- Extended reach. Thanks to state-of-the-art technologies, a financial firm can get customers globally and maintain a permanent rapport with them via multiple communication channels.
- Streamlined auditing. By leveraging auto-auditing software, organizations can simplify their auditing efforts and scale down possible errors humans may make.
- Automatic compliance. If the company employs cloud-powered payroll systems, there is no need to worry about regulations compliance since such software gets regular compliance updates.
- The ease of customization. Clients value a personal approach and treasure being treated not just like "another guy out there". Modern digital solutions provide plenty of opportunities for unique and timely offers directed at each customer personally.
- Bolstered security. Security in digital transformation is one of the top concerns for companies whose core activities are related to money. Let’s have a closer look at this problem.
Digital Transformation and Security in Financial Sector
Financial organizations have ever been under the high threat of cyber attacks. Why? Because they primarily deal with PII – Personally Identifiable Information related to clients’ account data and credit card numbers.
Knowing this, cybercriminals use a whole gamut of techniques and tools to access this information exploiting security breaches, using malware and ransomware, practicing phishing and domain infringement. Hackers’ methods are becoming ever more sophisticated, with malicious mobile apps, fake social media posts, and brand abuse gaining significant traction lately.
In the post-COVID world, security risks have been exacerbated by the extensive reliance of financial institutions on the remote working pattern, with personnel doing their job from home. As an AT&T research claims, this practice compromises security immensely since over a third of employees use the same device for work and personal matters, a quarter of them store sensitive data on unauthorized cloud apps, and a fifth of them share a device they work on with their family members.
What should be done to mitigate security challenges threatening financial organizations?
1. Raising the Employees’ Security Awareness
Cybersecurity is oftentimes threatened because of the human factor. So, banks must take steps to teach their staff the basics of security policy. Employees must be kept in the know about the current fraud and phishing schemes and be instructed on how to avoid them. They also should be taught to use only sanctioned devices, networks, and apps, not to open dubious email attachments, and report all suspicious messages and experiences to the company’s security team.
2. Practicing Proactive Approach
When you act reactively to stop security breaches, you are doomed to defeat sooner or later. Instead, organizations should forestall issues by embedding security into all their new services and onboarded software from the outset. And it should be done at the development and/or installation stage when all safety measures can be easily aligned with the organization's goals and workflow.
3. Introducing a Zero-Trust Model
The starting point of this concept is that any access point to the network is regarded as dubious by default. Users, devices, endpoints – everything should undergo a verification procedure before granting them access to the system. Zero-Trust protocols condition entry for people trying to connect to the network from certain locations and using specific gadgets. In case the algorithms fail to identify the security status of an endpoint applying for access, the connection is automatically denied.
Harnessing IT advancements in the Internet-reliant world of the 21st century is imperative for modern financial institutions. Alongside promising weighty benefits, across-the-board digitalization poses a number of challenges, the most serious of which are related to cybersecurity. Such risks can be countered by introducing a vigilant security policy implemented by seasoned IT companies that provide digital transformation services. Axisbits is one of such vendors whose contribution to the digitalization of your activities is sure to bring value to your business by immensely enhancing customer satisfaction and streamlining your workflow.