Why is technology important in BFSI?
BFSI or Banking, Financial Services, and Insurance industry plays a very important role in the global financial ecosystem by supporting business, trade, and economies. When the pandemic struck globally, financial loss had as much crippled financial firms outperforming peers and chalking out goals that could help them sustain became their number one focus.
This meant that by revolutionizing BFSI processes through technologies like AI and Blockchain, the nucleus of their strategy was enhancing customer experience to surpass the competition.
Preserving that sticky digital behavior and retaining customers, both young and old, post pandemic proved challenging. This made them stress on trying to deliver personalized experiences, communicating consistently and transparently, making remote connections with bankers a possibility, and providing an omnichannel banking experience. All this meant tectonic shift in their practices. Period.
What are the trending technologies used in BFSI?
This is officially a race, a very high stake one at that. One that involves innovation and digitalization. To shake things up, here are five technologies that the BFSI industry has leveraged in the last few years to turn race winners.
Blockchain
Disclaimer: I in no way received any sort of bitcoin remuneration for speaking about the glories of blockchain.
I am no blockchain expert, but security is something everyone values and Blockchain 2.0 as they say goes far beyond cryptocurrency and into the realm of – ‘for the greater good of mankind’. That is something I believe BFSI as an industry can benefit out of. Nowhere better thanks banks if you ask me to start enabling a straightforward, consistent, and transparent interaction or exchange between individuals.
With Blockchain, payments are probably the first thing that can get sorted for banking and financial institutions, in a thoroughly decentralized channel. It will also simplify and significantly reduce the need for verifications; settlements, and clearances with a ledger-style technology.
And as far as insurance is concerned, smart contracts are probably the best invention since sliced bread. With smart contracts, you can self-execute tracking claims, monitor changing conditions if required, and even achieve hassle-free payment transfers.
The blockchain take away for you is Smart contracts.
Big Data Analytics
This planet houses about 8 billion people (the number should have significantly improved by the time you finish reading this sentence) and that means the amount of data that is available is anyone’s guess. This is also the reason why I figured it needs to be second in the list after crossing security off it.
Big data has helped BFSI optimize their performance. Huge digitization drives brought in enough data to help make the most of incremental response modelling techniques that maximize return on investment and optimize customer targeting.
Risk analytics told banks and other financial institutions all that they needed to know about risky and fraudulent customers.
If you are a BFSI organization looking to leverage big data, then knowing the top 3 analytics techniques and finding the right solution partner should help you get the job done.
- Predictive modelling – to help predict behavior
- Risk analytics – to help optimize and control risks and maximize revenue
- Segmentation – to utilize algorithms, segment customers, and derive spending insights
AI or Cognition
Explaining my predicament to a bot instead of a human, getting my KYC done by pouting in front of the camera, or scanning and sharing digital softcopies instead of scorning at the bank/insurance official because they forgot to tell me about yet another document that was needed to complete a so-called uncomplicated account formation process. That is how simple AI has made our lives today, and that is also a way that the BFSI industry has been delivering personalized experiences through AI.
Again, if you are that same BFSI organization looking to also get your hands (figuratively speaking) on AI as well in the hopes of that winning customer smile, you will need to know about:
- Chatbots/ RPA bots – implement them to help answer FAQs, customer queries, settle claims and reduce repetitive work
- Face recognition – utilize this to have an eye out for surveillance and security purposes and for Video KYCs, use it for loan or insurance processing, and in the capital market, to help ease waiting time
- Image recognition – using OCR (Optical Character recognition) can help both the industry as a whole and customers particularly to have a seamless transition from paper to paperless.
IoT
So, here’s some math I found interesting, a worldwide forecast for connected devices says that by 2030 there will be around 50 billion IoT devices that will be in use around the world; what’s even more interesting is that the world population is not set to touch even 10 billion by that same time, imagine how connected the world is going to be. Anyway, I digress.
The 50 billion number is more of a yippie yay moment for the BFSI industry coz this means more streamlined work and better ways to detect frauds.
Auto insurance gets easier through connected cars, home insurance through smart homes, and wearables make life insurance simpler.
As far as the banking is concerned, there’s even a term called Bank of Things or BoT, just to show how IoT and banks have always known each other. So, BoT is nothing but helping financial institutions enable personalized, seamless, and rich interaction with their customers. It has the capacity to integrate multiple technologies viz. IoT, Big data analytics, AI, Blockchain …… to gain more information from their clients.
BoT is one term that Mr./Ms. BFSI needs to be on the lookout for.
Cloud
Now getting to the top at last. If I don’t include cloud computing in the list, it means I finished the meal without a dessert.
Even though you go big with your data analysis and nitpick every transaction with Blockchain, connect everything from a bus ticket to a yacht purchase with IoT, and use your face to get a loan to pay for that yacht, everything still needs a place to stay and that is where, by eliminating the cost of infrastructure you have Cloud computing to enhance all your processes.
Making great cloud apps can ensure efficiency in transactions, and if you use low code/ no code platforms you are even lowering app development costs. Creating low code apps to onboard customers or manage loans is a good place to start.
If I haven’t already said enough, Cloud is going to help you lower your operational costs, help you scale to match any unforeseen demand surge by just adding a little bit of extra space on cloud; give that added boost to online and mobile banking or insurance. Also using Banking APIs can lessen your work further, especially in tasks like creating bank accounts for NBFCs.
I have said quite a bit here and there about a lot of things, I will do my due diligence about them in my later blogs, in the meantime you can write back to us about any comments you may have about this blog and if you like what you read, hit subscribe.
