Financial Thoughts

The Impact of Digitalization On Financial Services

Man with a computer

Digital finance is a strong medium that has facilitated the access of customers to simpler, faster, and safer financial services. Even consumers who do not have bank accounts use the digital medium to access financial services.

Some financial agents is providing better and more suitable financial services at a greatly reduced cost than conventional banking. You can call this ‘branchless banking.’

The Move Away From Traditional Banking

The empowerment of common folk within the financial sector has come with internet finance – part of the digital revolution for personal finance. Banking can, at times, be rather complicated and there have been easier methods devised to provide consumers with money as and when they need it.

Traditional banks located in spacious, fancy buildings can be a bit of a stumbling block when trying to connect with low-income groups. Also, in remote areas, a full banking infrastructure is not viable, and conversely, it’s expensive for customers in rural areas to be traveling into the city to do their banking. All of these obstacles have been solved by digital finance.

Digital is Global

Digital revolution is expanding exponentially and impacting the global economy. It is transforming the way financial transactions are done. Some of the benefits of the digital revolution in finance are:

  • Decreased operating costs.
  • The development of new financial products and services.
  • Ease of access to all levels of consumers.

The Shift

Advancements in technology are providing new opportunities for FinTech start-ups. They also help to direct development amongst interested stakeholders such as government departments. The management of digital finance requires an effective regulatory infrastructure on a global scale. Some policies and regulations could include things like:

  • Determining innovative processes within a legal framework.
  • Regulation of modified digital finance like e-money.
  • The control of mobile-based international remittances.
  • Monitoring digital financial services.
  • The regulation applied to third-party agents.

Impacted Domains

The digital revolution has been making strong inroads into financial services such as credit, insurance and savings, to mention a few. The reach of digital finance extends past conventional financial services. It is also a tool to help with job creation in developing countries. Jobs unheard of before such as:

  • Blockchain specialist. You can store transactions permanently and securely using Blockchain technology. Users have access to all transactions. Banks and other financial institutions are beginning to realize the potential benefits. Experts in this technology are in demand.
  • Data Scientist. There is so much big data being stored that it needs specialists to extract the pertinent information that relates to the finance sector. It’s all about the correct and legal utilization of personal data to be able to target the needs of consumers more accurately.
  • Financial Psychologist. There is the psychology behind everything we do – spending, relationships, faith, finances, applying for loans, and choosing one product over another. By applying scientific and sociological techniques to these aspects of consumer spending, financial institutions can be more accurate in their targeted advertising of products.
  • Retail Business. Retail business is also dependent on digital finance. It means that small businesses have access to funding as well as the electronic payment system. Computerization provides an easily tracked financial record.

Innovative Technologies

Man at a computer with a lightbulbPrepaid and mobile electronic payment technology has simplified the lives of many people around the world. Traditional banking has embraced digital finance with mobile deposits and online transactions. The latest technologies are being readily adopted by customers. In an increasingly integrated international economy, innovations from various markets could be implemented and customized to suit local requirements. The digital finance journey is just beginning.

Small Business Finance Solutions

Electronic billing and the use of credit cards and the introduction of online payment systems have all been the systems and processes used by large corporations. These days, small businesses are also using them as part of their finance solutions. The changes are in no small way thanks to social media and smartphones. There are significant savings when using electronic financing technologies, and more and more businesses have become involved in billing, accounting, and processing.

Thank You Social Media

We can thank Facebook, Paypal, eBay and Amazon for the advancement of smart financial solutions. These huge businesses have created not only legitimacy among the general public but trust in making transactions in digital form with almost anonymous sellers. As the key demographic for retail slowly transitions to the generation of the iPhone a further transfer to pure digital operations will take place.

Loans Online

Applying for a loan has never been easier. You can access online lenders or even request a loan through your bank from the comfort of your home. The paperwork has decreased dramatically. Credit checks are also carried out electronically by the lender making the whole loan process as quick as an hour for approval and funds being available same day or next working day.

Digital Banking

There has been a revolution in banking services in recent years. Advances in ATM software, online services, and banking technology has been racing forward. Along with the sophisticated technology, people have also become smarter when it comes to their finances. You no longer wait for a bank statement in your letterbox to know how your account is going. You can access your account online 24/7, and with computers and mobile phones, you have far more control at your fingertips.

When online banking started, there was also some anxiety from customers about security. Logging into your account from your home computer meant that somebody else could also log in to your account. But security has improved just as technology has advanced. Users are now happy to control their finances using digital banking.

Financial institutions and intermediaries are interested in keeping up with the saving and financial habits of the younger generations.
For that purpose, they will have to continue investing in the new technology that helps the consumers to take control on their personal finances.

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