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While digital innovation has dramatically improved systems' connectivity, usable data analytics, fraud detection and reduced cost, the improvements have created new business models as a result. And as technology has increased the process of exchanging information and reducing transaction costs, financial services production has become disaggregated.
Specialized companies have unbundled financial products and services, allowing consumers to determine their best product solutions. However, general economic issues remain critical even within digital production. Economies of scale, scope and network effects are still present in many financial services products, including customer acquisition, funding, compliance activities, data and capital. Financial services innovation is necessary to move the fintech industry forward.
What Is Financial Services Innovation?
Financial services innovation involves developing new financial or investment products, services or processes, including updated technology, risk management, risk transfer and credit and equity. Digital technology is dramatically transforming financial services and enabling consumers to save, borrow, invest and purchase goods much faster and easier.
New Employee Work Paradigm
The global pandemic crisis has changed the traditional ways of working, radically altered employees' mindsets, and empowered innovation more than ever before.
It used to be that CEOs believed all employees had to work under the same roof to be successful. But the mass experiment of remote working at scale proved that a distributed workplace delivers results.
As many employees worked from home, there was a need to resolve the challenge of keeping everyone connected. And tech experts rose to the occasion. Innovation was in overdrive, and they created new software platforms and updated older versions to accommodate the new work environment.
The tech-enhanced hybrid working style is acknowledged positively and gives workers more freedom and autonomy to maximize innovation and creativity.
Under this new work/life paradigm, creativity is growing in the workplace. This cohort includes digital nomads and remote workers, allowing them to choose where, how and when they want to work.
Upcoming Financial Services' Competition
The financial services industry, consisting primarily of banks, is ripe for innovation. Strict regulations, established operations and legacy systems have hampered financial companies for years. But now, there is a calling for a different financial services innovator with tools and technology expertise.
As more fintech companies become players in the financial services industry, innovative ideas are one of their greatest assets. They are not bound to adhere to the same rules and regulations as older, more traditional financial institutions. Banks are in the process of putting their innovation into overdrive, but they will be hard-pressed to catch up with the smaller, more agile fintech companies. And it's cloud technology and connectivity that are driving the financial services innovation train.
IT And Development Resources Are Easily Accessible
The cloud enables customers to access data, and high-powered technology is available at reasonable pricing to anyone. There’s also no need to purchase costly on-premise infrastructure. Smaller fintech businesses can now access enterprise-grade tools and technology capabilities. With cloud development platforms, anyone from any location can quickly collaborate on projects and develop new solutions.
Security Builds Consumer Trust
Securing digital financial solutions was a deterrent for businesses that wanted to enter the market. Customers were uncomfortable conducting online financial transactions, and they didn't trust their transactions were safe. But over time, they have become more comfortable doing business online.
Now, cutting-edge cloud solutions are highly protected with connectivity options like network as a service, enabling fintech institutions to monitor data in transit. Most customers have confidence in the safety of digital transactions.
Bandwidth And Service Scalability
Most successful startups are adept at getting their brand to market. But it can be challenging without flexible technology, a connectivity foundation and amply supporting the business. If your business was not set up to quickly scale your bandwidth, an increase in demand could cause serious trouble and unhappy customers.
Fortunately, cloud services and connectivity methods used to connect to them are flexible. Fintech startups and larger traditional financial institutions can plan to pay for the bandwidth they need now and change the scalable bandwidth on demand as their business needs change.
Automation
Automation transforms internal operations and customer expectations, delivering the core services that customers demand. Connectivity is the foundation of every transformational opportunity. Scaling an automation process across an organization helps the business thrive in an environment with rapidly changing technology, differing customer preferences and increased employee expectations. Automating day-to-day tasks can improve customer service, streamline, scale and optimize operations.
Internet of Things (IoT)
IoT applications aim to transform finance and many other industries by connecting sensors, appliances, vehicles and other devices. This data is highly valuable to better understand how customers use, distribute and consume these applications. Engineers in the future will need to be skilled data scientists, data miners and information aggregators that find a way to deliver value to consumers.
For instance, financial services organizations can use IoT devices to track client behavior and purchase preferences to offer more personalized products and services. They can also use IoT to enhance security, track suspicious activity and authenticate customers.
Artificial Intelligence (AI)
AI uses computer capabilities to imitate human intelligence to analyze data image recognition, facial recognition, data analytics and decision support.
AI helps the financial industry streamline and optimize processes, including making credit decisions, quantitative trading, financial risk management and predicting customer behavior and purchase history. AI is particularly helpful to financial institutions to better assess, predict and evaluate loan risks that can help improve loan underwriting and reduce financial risk.
Conclusion
Whether you are an established corporate financial services company or a new fintech startup looking to access robust cloud services, a secure infrastructure, or operational scalability, our tech professionals can provide the necessary connectivity. We create the right tools and solutions for workforce work/life options, and better communication across your business anywhere across the globe, inspiring your workforce to further develop financial services innovation.
Contact us today at Consolidated Communications to discuss how we can provide the connectivity and innovative solutions you need to best align with your business growth goals.