How is technology benefiting the financial world?
12 DEC 2019
12 DEC. 2019 / por Isadora Soliani
The change of scenery from traditional to digital finance has brought the need for more agile processes and innovations in technology and solutions. After all, the consumer of the Digital Age seeks primarily personalized service, minimal fees, and speed.
To gain some competitive advantage and provide cutting-edge service to their customers, banks and other financial institutions are increasingly investing in ultimate technology and IT infrastructure.
Key advantages when making this type of investment:
- Increased productivity
- Reduction of operational errors
- Greater process control
- Increased security
- Cost savings
- Higher quality customer service
The benefits of adopting technological solutions in the activities of a bank or financial means are
numerous and considerable. According to KPMG, the total value of investments into Fintech companies worldwide more than doubled in 2018, reaching $111,8 billion, mainly driven by big deals and M&As.
Investment on Regtech also more than tripled, from $1.2 billion (2017) to $ 3.7 billion (2018)
How are banks and other financial institutions using technology?
Big data and analytics are at the top of the ranking of the areas that banks invest the most.
Technology tools optimize various compliance practices and numerous general risk management, control, analysis, and prevention processes.
Some examples of practices that can benefit:
- Data collection and analysis;
- Background check;
- Third-party checks (KYC, KYE, KYP);
- Due diligence;
- Interest conflicts;
- Risk Mitigation.
The use of software that collects and structure updated data at speed can help on process automation hence optimizing the workload; some of the solutions available also use unique algorithms and machine learning to improve the analytical process.
Agile transactions, information sharing, and easy access to data tend to significantly increase productivity, enabling staff to do more with less time. Using technology solutions also speeds up the credit analysis, a very critical financial process that can benefit from the use of Big Data, data collection, and analytical software. After all, this type of technology enables faster, standardized, and assertive customer evaluation, facilitating negotiation between both parties.
In this way, the financial means can significantly reduce the default rate, the costs of the collection and breaking staff increase the number of sales by credit approval. It can also reduce risks and prevent financial fraud.
Finance professionals can use a specialized data mining platform or software to accelerate the investigation process and find out if there are any conflicts of interest involving suppliers and partners. Consequently, reducing the risks of financial fraud, such as money laundering, diversion, illicit enrichment, and tax evasion.