Preparing For Q3 and Q4, Financial Trends To Watch For
Most businesses have suffered for the last two or three years because of the ongoing Covid-19 pandemic. Hence, businesses had to change their traditional operating models to adapt to the fast-changing, tech-driven environment. We can expect more drastic changes and trends in the next few years, as customers are becoming more accustomed to a largely tech-influenced business environment.
One of the areas that are most affected by the ongoing change is the financial service sector. Nowadays, customers want to enjoy the convenience of accessing any service from anywhere. Smartphones provide this convenience, so little wonder customers demand the mobile banking experience. For this reason, financial service companies need to improve their operations to properly serve the new digitized lifestyle that most consumers now have.
Now, let’s look at some of the biggest trends we will see in the financial service sector in the third and fourth quarters of this year.
Mobile banking is a trend that banks and other financial service providers are looking to explore even more in the third and fourth quarters this year. There are over six billion mobile phones and about 1.7 billion unbanked people globally in 2022. 66% of unbanked people worldwide own a mobile phone. That leaves banks and financial service companies with a large market ready to be explored.
However, more people want to carry out everyday transactions via phones than through traditional methods. For most people, their mobile phone is their connection to the digitized and tech-driven world. Hence, banks and other financial service companies are moving to provide digital experiences through their mobile apps. And we can expect many remarkable benefits from this for financial service providers and customers. Here are some of the benefits of mobile banking:
- It is cheaper for banks and other financial service companies to provide financial services via mobile phones than by having customers visit their onsite branches.
- Mobile banking is more convenient for customers than traditional “brick and mortar” banking. The convenience of having a constant connection to our banks from our mobile phones is one that most customers want nowadays.
- Mobile banking allows financial service providers to offer better services to their customers. They gain access to a vast range of customer data, allowing them to provide products and services tailored to each customer.
- It also allows financial service providers to step up their security models to reduce fraud with tools like biometrics verification.
Cloud banking has been a work in progress for most banks and other financial service companies even before the Covid outbreak, but the pandemic accelerated the process. Cloud banking is a powerful banking model in high demand by customers. Cloud services will allow banks and other financial service providers to process and securely store large data files in the cloud. Cloud banking also allows easy integration of data and projects across several platforms and technologies like blockchain.
Many big financial service corporations see cloud banking as a way to fulfill their environmental and social responsibilities. It allows them to commit to their sustainability and decarbonization policies as it eliminates the need for building large infrastructures that may leave high carbon footprints.
Machine Learning and Artificial Intelligence
Machine Learning (ML) and Artificial Intelligence (AI) are two of the most sort after technological trends in the world. Many business sectors are quickly adopting ML and AI into their operations, with the financial service sector as one of the earliest adopters of both technologies. Financial service providers can use AI and ML to automate repetitive processes, assess risk, and prevent fraud in the financial service sector.
All of the tech trends we will discuss in this article are interrelated, and each one is essential to optimize the efficiency and effectiveness of the other. We expect mobile banking to take an even more central position in our everyday life this coming year. That means there’s equally the need for mobile banking to be integrated with AI and ML to optimize the customer experience. Several financial service corporations will be looking to invest in and integrate AI and ML with their financial services to stay ahead of their competition in the financial service industry.
The International Data Corporation (IDC) for AI worldwide spending guide for 2021 to 2025 predicts that the financial service sector will be the second top investor in AI. The financial service sector will contribute up to 14% of the $204 billion worldwide annual AI spending by 2025.
Security is one of the major concerns for financial service providers, so they are always looking for ways to ensure they have secured platforms. Financial service providers will explore mobile banking more in the coming years, so we expect them to integrate blockchain into their operations.
Blockchain is a decentralized, shared, and encrypted system for processing and storing data. Blockchain data is encrypted and stored on a decentralized platform that protects the stored data against external and unauthorized access.
Banks and other financial service providers have been working on blockchain projects for a while now, and we expect them to adopt blockchain technology further in the third and fourth quarters of this year. Financial institutions like HSBC and Wells Fargo have been carrying out their foreign exchange trades on blockchain tech. Other financial service providers like Paypal and Mastercard accept blockchain-based currencies (crypto) for payment on their platforms. Some financial service companies have already created their cryptocurrency. The JP Morgan-owned cryptocurrency known as the JPM coin is another example of how financial service providers are adopting blockchain.
Integrating These Technological Trends To Improve Customer Experience
Many banks and financial service companies are beginning to switch from their traditional operating models to the technologies we discussed above. We will see them deploy these technologies together to solve their everyday business problems as they get comfortable with using them.
Banks and other financial service providers are adopting these techs to offer their customers improved and optimized experiences. Many banking apps now have inbuilt AI assistants and chatbots to help customers perform banking tasks on their mobile phones. AI, cloud service, and blockchain will allow financial service companies to offer their customers a more automated and secure mobile banking experience in 2022 and beyond.