Data and FinTech: Keys to Hyper-Transformation of Financial Services

“77% of traditional financial institutions are poised for FinTech adoption to boost customer retention. With competition reaching an acme, lagging is no longer a choice. In the next five minutes, find out how Kellton Tech, a leading FinTech software development company in the UK, can help to make FinTech adoption a reality for your business.”

The financial sector, for long, had a ‘dinosaur’ sentiment attached to it. The sector resisted change or couldn’t find the right way to break the legacy trap. 

However, today, the scheme of things is different from what was seen years ago, and disruptions caused by the COVID-19 pandemic seem to have accelerated the transformation that was gradual at first.

Adaptability and faster iteration, not to mention instant gratification, are the key attributes of the conventional financial sector. Traditional processes have been replaced with automated, smart systems that complete tasks in days rather than weeks or months. Services have been hyper-personalised and delivered based on customers’ personal preferences and patterns reflected in the historical data. User experiences that were prey to red tape are enabled right at the fingertips and, hence are agile and flexible.

To a greater degree than ever, FinTech is at the heart of the digital transformation of the financial industry. A catch-all term for ‘Financial Technologies,’ FinTech has helped enterprises streamline, digitise and augment traditional processes and operate at the pace of change.

FinTech: A Formidable Force of Disruption for Financial Enterprises

FinTech has been a catalyst to change sweeping the financial industry as of late. Facilitating FinTech, CXOs have successfully automated run-of-the-mill tasks that were manual and expensive. Paperless banking, secure mobile gateways, mobile wallets and many more concepts are no longer a matter of wishful thinking. In addition, the rise of cognitive bots redefined customer service, with users getting to where they want without interacting with a real, live human at all.
 
What’s more, FinTech has made it possible to release more diversified products based on customers’ understanding and serve them more seamlessly than ever. With platforms allowing users to peruse their investment options online to ML algorithms predicting market trends and predicting the best-value opportunities, FinTech is ushering in and unlocking all innovations possible.

The ongoing pandemic – which locked populations in their homes – has been a boon to the boom of FinTech culture, with companies making their solutions more digital and mobile-friendly.

The State of FinTech Adoption in the United Kingdom and Europe

The FinTech space in the UK and Europe is thriving, and the numbers speak for it. 

From 2017 to the first half of 2020, the UK took the lead in European FinTech, having clocked a record acquiring the largest number of FinTech investments (500 in number), with Germany and Sweden (172 and 155 respectively) following. 

fintech funding countries

Top 20 Countries Ranked Based on FinTech Funding – The UK Leading the Pack (Source)

In the past three years, around €8.1 billion was invested in FinTech companies based in the UK, which is 48% or almost half of the total financing rounds. FinTech companies in Europe raised a total of €3.52 billion in 2018 and a whooping €8.81 billion in 2019. In 2020, these investments ballooned to reach €10 billion for the year.

From 2017 to 2019, almost 369 FinTech funding deals were tracked annually in Europe, which was more than once a day. In the first half of 2020, 219 funding deals were brought to notice, which indicates a climb in the number of FinTech deals for that year. 

FinTech Bringing Data at the Forefront of Change in the Financial Sector

FinTech and Data share a correlative relationship. Simply speaking, while FinTech helps financial players leverage the hidden potential of their data, data also plays a part in propelling FinTech innovation and drive value creation for organisations.

This section explains how FinTech is driving data to the position of prominence in the financial sector.

The volume of data in financial enterprises is too overwhelming for humans to handle. This is where technology chips in. The ushering ecosystem of FinTech helps the C-level embed advanced integration capabilities to enable the curation, collection, interpretation and analysis of data.

Actionable insights are, henceforth, obtained that further help in realising three key objectives:  

  • Intelligent decisioning in real-time. 
  • Personalise at scale. 
  • Understand customer journeys. 

INTELLIGENT DECISIONING IN REAL-TIME:

Data, when sanitised and structured, helps financial institutions decide on their next steps. By extracting relevant insights, enterprises can understand and even predict market dynamics, identify time-sensitive opportunities and pan out a viable, meaningful growth strategy. Data analytics can help manage risks better and identify potential bad investments or flag debts that can threaten operational stability. Tracking transactions and spending habits of customers with the aid of insights can help contain fraud and cut losses. One of the core benefits of leveraging data is compliance. Since data can proactively point out at financial irregularities, it can be easier for enterprises to take preventive action before the issue grows. 

PERSONALISE AT SCALE

Financial enterprises that adopt FinTech can capture customer data, get a grip on their personal preferences, and have their user experience in mind at every stage of releasing a new product or service. This can go a long way in ensuring customer engagement that’s focused, timely, intelligent and sales-boosting. Customers, in return, can feel trust towards the brand and plan on staying longer. Leveraging data, financial players can make recommendations focused on choice. By digging into analytics and better understanding their customers, they can funnel their insights into personalised guidance and enable highly engaging, positive CX. 

UNDERSTAND CUSTOMER JOURNEYS

Traditional customer journey mapping is useful, but data takes it to the next level. As soon as a customer enters the ecosystem, analytics can help enterprises track engagement touchpoints and act on them – faster. With data, CXOs can revisit customer engagement cycles, identify critical requirements and success factors, produce KPIs (key performance indicators), and launch appropriate strategies for enhanced outcomes such as improved retention and ROIs.

Data: The Oil for FinTech Innovation

It’s cliché to observe that big data has been propelling FinTech innovation and provides more avenues for organisations for value generation. Data is proving to be a vital cornerstone of discovering new ideas that can take FinTech to a new cutting-edge of innovation. 

Other than what we already know, data is firmly trusted to enable:

1. Robo-Advisors that are gradually coming to mainstream and beneficial to customers looking for personalised, low-cost financial advice.

2. AI Under the Bonnet that can contribute to analysing previous academic and business performance to predict future earnings, look for reviews, and build a financial picture.

3. Financial Digital Identity, which, when stored in a distributed ledger, can act as a ‘financial digital passport’ – a classic example of data reinforcing the application of the Blockchain technology for financial services

4. Revolutions in identity and verification (ID&V), know-your-client (KYC), and due diligence with the tamper-proof nature of Blockchain technology and its application to digital identities. 

5. Clean Tech where innovation is about changing perspectives. Remember how the insurance sector uses the past to predict the future? What if it can use the present to do so? Insurance companies are partnering with climate scientists to investigate new ways of containing risk via non-standard data sets that feed predictive models. 

6. Financial Health where by exploiting data and deploying AI assistants, financial enterprises can help customers to tackle their spending. They can analyse customers’ credit card usage, show customers how much they spent and suggest ways to curb the excess.

Big Data in FinTech: Challenges in Implementation

FinTech with Data as its key is set to sail the unchartered waters. However, this optimism can be overshadowed by a few challenges that make the implementation of data for Fintech innovation tough.

1. Regulatory Pressures

Escalating concerns over privacy are forcing establishments to tighten laws and making it difficult to collect and store data. Financial organisations are on the radar because they often deal with sensitive customers’ information.

2. Security

Too much fiddling with users’ critical information for innovation can easily cause a breach, putting financial enterprises in a tight spot. Leaders, hence, are needed to pay meticulous attention to detail and keep their innovation endeavours well within limits.

Kellton Tech: Assisting Financial Enterprises in Capturing the Promise of FinTech for 15+ Years

FinTech, undeniably, is ripe for the picking if you’ve digital transformation of your financial business on your mind. Challenges, however, can get the best of you, crippling the process right at the first hurdle. So, if you’re looking to embrace FinTech and get the most value out of your data sets, get in touch with Kellton Tech today.

We are a leading FinTech software development in the UK, backed by nearly two decades of experience. We are known for our proven approach in creating custom, analytics-driven FinTech solutions. We have helped multiple businesses streamline their processes, drive efficiency, revolutionise customer experiences, and enable them to become high-performance engines – all this while displaying an ability to sense market shifts and shape a well-fit response. 
 

 

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