Challenges Facing the Financial Service Sector

29/12/2020 0 By indiafreenotes

Regulatory Compliance in Finance

The ever-changing regulatory environment poses a constant challenge for financial institutions of all types. Regtech is an emerging industry that can help ease the burden of compliance. By using the latest FinTech technologies to address regulatory compliance, RegTech startups are bridging the gap between regulators and the financial service industry.

Cybercrime in Finance

Data breaches involving financial service firms increased by 480% from 2017 to 2018. With each attack costing financial institutions millions, innovative solutions are needed if we are to avoid a repeat of the lawless days of the Wild West. Whatever cybercrime solutions emerge to protect financial services, blockchain technology must be the foundation. As more and more institutions adopt distributed ledger technology (DLT), blockchain will become the de facto solution to keeping financial data secure while at rest.

Integrating DLT with existing financial infrastructures poses some serious obstacles that must be overcome. Even so, we are past the point of asking whether blockchain is the holy grail of financial data security.

Eliminating Data Breaches

Financial service firms are prime targets for cybercrime. Because of the sensitive data they carry, they are more likely to be targets. In fact, financial service firms were hit 300 times more than other business.

Big Data Use in Finance

Big data provides both opportunities and obstacles for financial service providers. Tapping into social media, consumer databases, and even news feeds can help banks better serve their customers, while better protecting their own interests.

But sorting through torrents of unstructured data for useful information is no small undertaking. It requires powerful data analytics technology if institutions are to reap a benefit.

Fortunately, data analytics solutions are emerging with the potential to transform asset management, trading, risk management, and other financial services.

Customer Retention in The Financial Services Industry

Competition for financial service clients has never been fiercer. While brand loyalty may not be dead, it is definitely on life support.

What matters to most customers in this year is greater personalization, more automated services, and easier access to services. Institutions that can deliver all three will capture their share of the market.

Key to not losing the battle is recognizing that customers are less concerned with brand familiarity than getting the services they want. Providing customers those services is key to client retention.

Exceeding Consumer Expectations

Consumers continue to expect a lot from their financial institutions. Many want a more personalized service from their financial providers.

According to the 2019 Accenture Global Financial Services Consumer Study, one in two consumers want personalized advice from banks based on their personal circumstances. They want an analysis on their spending habits and advice on how to handle money. 64% of the participants are interested in insurance premiums that are tied to their behavior, such as having a good driving record.

AI Use in Finance

Industry experts believe that AI will transform nearly every aspect of the financial service industry. Automated wealth management, customer verification, and open banking all provide opportunities for AI solution providers.

Powerful advances in deep learning technology are paving the way for AI. In fact, if you have been alerted by your bank of suspicious activity on your account, you have likely already benefited from AI.

The challenge that financial services face is learning how to benefit from the power of AI, without being victimized by it. In R&D labs across the world, that question is being pondered at this very moment.

Employee Retention in The Financial Service Industry

Today’s financial service companies not only find it difficult to attract customers, but they are also finding it difficult to attract employees.

A lack of qualified talent to fill new IT roles, and a millennial workforce that shuns long-term employment, are leading factors in finding good help.

Institutions that want to attract and retain a qualified workforce must change their philosophy. No longer is it enough to offer good pay and benefits; workers now expect employers to nurture a culture that is accommodating to the values and lifestyles of the employee. Change is necessary if stable and qualified workforces are to be achieved. But don’t expect it to come easy.

Blockchain Integration in Finance

We talked earlier about blockchain as a key component in the battle against cybercrime. But data security is not the only application for blockchains in the financial sector.

Far from it, cases across the globe are already proving the value of blockchain in a wide variety of banking and investment applications. From solving challenges faced by investment banks to helping customers make safer payment transactions, the list is growing daily.

Crossing the Digital Divide in Financial Services Marketing

Success in the era of digital banking means more than having a mobile app. It means digitizing your entire brand. How do you do that? You shift your advertising campaigns from conventional ad media to digital channels. Which is another way of saying you reach your target audience where they are today, rather than where they were yesterday.

Of course, social media exposure is necessary, but you need more than a Facebook ad. You must tap big data and AI to help locate potential customers, and to deliver customized offers in real time.