5 Reasons Financial Digital Transformation Is Actually A Good Thing

According to GlobeNewswire, the global digital transformation market is projected to grow from $469.8 billion in 2020 to $1,009.8 billion by 2025, at a compound annual growth rate (CAGR) of 16.5% during this period. This shows the huge potential and opportunity of digital transformation for the finance industry, as well as the urgency and necessity of embracing it.

But what exactly is financial digital transformation, and why is it a good thing for both financial services providers and customers? In this blog post, we will answer these questions and explore five reasons why financial digital transformation is actually a good thing. 

Improved Customer Experience

One of the main benefits of financial digital transformation is that it can enhance the customer experience. Customers today expect seamless, convenient, and personalized digital experiences in all aspects of their lives, including financial services. They want to access their accounts, make transactions, and get support anytime, anywhere, and on any device.

Digital innovation in finance can help meet these expectations by providing:

• Omnichannel integration: Customers can interact with financial services providers across multiple channels, such as online, mobile, social media, chatbots, and voice assistants, and have a consistent and smooth experience.
• Customer-centric design: Financial services providers can design their products and services around the needs and preferences of their customers, rather than their own internal processes. This can increase customer satisfaction, trust, and loyalty.
• Personalized offerings: Financial services providers can leverage data analytics and artificial intelligence to understand their customers better and offer them tailored solutions, recommendations, and advice. This can increase customer engagement, retention, and cross-selling.

Increased Operational Efficiency

Another benefit of financial digital transformation is that it can increase operational efficiency. Statista reported that spending on digital transformation technologies and services worldwide is expected to reach 3.4 trillion U.S. dollars by 2026, with process automation, cloud computing, and blockchain technology being among the top drivers of this growth. By digitizing and automating processes, financial services providers can streamline their workflows, reduce errors, and improve quality and speed.

Digital innovation in finance can enable:

• Process automation: Financial services providers can use robotic process automation (RPA) and artificial intelligence (AI) to automate repetitive, manual, and rule-based tasks, such as data entry, transaction processing, and compliance checks. This can free up staff time, reduce human error, and lower operational costs.
• Cloud computing: They can use cloud-based platforms and services to store, manage, and access their data and applications. This can reduce the need for physical infrastructure, increase scalability and flexibility, and enhance security and reliability.
• Blockchain technology: These firms can use blockchain technology to create distributed and immutable records of transactions and contracts. This can increase transparency, trust, and efficiency, as well as reduce intermediaries, fraud, and costs.

Time And Cost Savings

A third benefit of financial digital transformation is that it can result in time and cost savings. By using digital technologies and solutions, financial services providers can optimize their resources, improve their performance, and increase their profitability.

Digital transformation services lineup of finance can lead to:

• Faster service delivery: Financial services providers can use digital technologies to deliver their products and services faster and more conveniently to their customers. For example, they can use online and mobile platforms to enable instant payments, transfers, loans, and investments, as well as chatbots and voice assistants to provide 24/7 customer support.
• Lower operational expenses: They can use digital technologies to reduce their operational expenses, such as labor, infrastructure, and maintenance costs. For example, they can use process automation to reduce staff workload, cloud computing to reduce physical infrastructure costs, and blockchain technology to reduce intermediary fees.
• Higher revenue growth: Financial institutions can use digital technologies to increase their revenue growth, by attracting and retaining more customers, offering more products and services, and expanding into new markets and segments. For example, they can use customer analytics and personalization to increase customer loyalty and cross-selling, and fintech solutions to reach underserved and unbanked customers.

Enhanced Data Analytics And Insights

A fourth benefit of financial digital transformation is that it can enhance data analytics and insights. By collecting, processing, and analyzing large amounts of data, financial services providers can gain valuable insights into their customers, markets, and operations, and use them to make better decisions and strategies.

Digital modernization of finance can facilitate:

• Data integration: Financial services providers can use digital technologies to integrate data from various sources, such as internal systems, external platforms, and third-party providers. This can create a unified and comprehensive view of their data, and enable cross-functional collaboration and analysis.
• Data visualization: They can use digital technologies to visualize their data in interactive and intuitive ways, such as dashboards, charts, and graphs. This can make their data more accessible and understandable, and enable faster and easier reporting and communication.
• Data-driven decision making: These firms can use digital technologies to apply advanced analytics and artificial intelligence to their data, such as predictive analytics, machine learning, and natural language processing. This can generate actionable insights, recommendations, and forecasts, and enable data-driven decision making and planning.

Watch more: What are the best digital transformation technologies in 2024?

Competitive Advantage And Innovation

A fifth benefit of financial digital transformation is that it can create competitive advantage and innovation. By embracing digital transformation, financial services providers can differentiate themselves from their competitors, meet the changing needs and expectations of their customers, and create new value propositions and opportunities.

Digital innovation in finance can foster:

• Customer loyalty and advocacy: Financial services providers can use digital technologies to create superior and memorable customer experiences, that can increase customer satisfaction, loyalty, and advocacy. For example, they can use customer-centric design, personalization, and omnichannel integration to create seamless and tailored customer journeys, and use gamification, rewards, and social media to create fun and engaging customer interactions.
• Operational excellence and agility: They can use digital technologies to achieve operational excellence and agility, that can increase their efficiency, effectiveness, and responsiveness. For example, they can use process automation, cloud computing, and blockchain technology to optimize their workflows, improve their quality and speed, and enhance their security and reliability, and use data analytics and artificial intelligence to improve their performance and adaptability.
• Product and service innovation: They can use digital technologies to innovate their products and services, that can increase their value proposition and market share. For example, they can use fintech solutions, such as robo-advisors, peer-to-peer lending, and digital wallets, to offer new and convenient financial solutions, and use open banking and banking as a service, to offer integrated and holistic financial ecosystems.

Watch more: What are digital commerce solutions? Benefits, Types, Best Practices and more

Conclusion

Financial digital transformation is not a buzzword, but a reality that is reshaping the future of finance. By using digital technologies and solutions, financial services providers can improve their customer experience, operational efficiency, time and cost savings, data analytics and insights, and competitive advantage and innovation. These benefits can translate into higher customer satisfaction, loyalty, and retention, lower operational expenses and risks, and higher revenue growth and profitability.

If you are interested in learning more about how digital innovation in finance can help your business, please contact us. We are a leading digital transformation agency that can help you design, develop, and implement digital solutions that can transform your financial services. We have the expertise, experience, and technology to help you achieve your digital transformation goals and objectives. Let SmartOSC help you make financial innovation a good thing for your business.