Finance & Accounting

Upcoming Future of Financial Services: An Overview

The pandemic accelerated the process of digitization and digital engagement of the financial services which was already gaining its ground at a gradual pace. This was evident when the financial services shifted from the plush office buildings to the cosier and comfortable homes. The services such as customer care services shifted to the bedrooms, physical trading stopped and remote trading took off, huge jump could be seen in the personal trading platforms and electronic payment system became the preferred choice. These changes are glimses of the future of financial services.

The financial industry to a great extent adjusted to the sudden changes that came after lockdown and the present circumstances reveal that the population involved in the financial services have not only adjusted but adapted to these changes in their day to day affairs. Moreover, these financial services providers are thinking of internalising these changes brought by the digitization into their working apparatus. The technical teams of these service providers are bringing in changes in their existing systems which shall transform the way these financial services were provided earlier and enter into the future of financial services.

What are ‘Financial Services’?

Financial services can be said to be those services that are involved in the management of money. The role of financial services is to facilitate transactions in goods and services, rally funds from multiple sources, allocation of those funds in productive domains, management of those funds by the managers and also includes diversification and management of risks involved in making such investments.    

Future of Financial services in the coming years

Following services shall form the future of financial services:

Digital Banking taking lead over cash banking

Digital banking system existed before the pandemic hit the economy but still the cash based banking system takes the upper hand. However, an upsurge had been observed in the use of digital banking and payment systems because of the pandemic. Most of the users who used digital banking and payment services have found it difficult to revert back to the earlier cash banking because of the benefits which cashless system brings along.

With increased use of digital banking, a steep rise has been seen in the finance apps which are providing contact less and cashless services that some people have never felt the need to even go to the banks to avail their services. This will definitely result in innovations and discoveries in the fields of data analytics, artificial intelligence, machine learning^[1] and more of financial technology apps. 

Transition from Corporate Trading Floors to Remote Trading 

Pandemic forced complete lockdown of the public places including the offices. This included the shutting down of the company offices that indulged in the business of institutional stock broking. As a result, the stock broking business moved from trading in corporate offices to the homes of the traders. Apart from few ‘essential workers’, almost all the trading firms shifted their working station form the official trading offices to the homes of their employees. This shed the earlier notion that stock broking business could only be executed from the corporate trading floors only using the company operated softwares. Companies that had taken into account backup options such as shifting their services to a completely new physical location also turned out to be futile when every access to public places was stopped by the government.

Witnessing such a situation for the first time in life, these financial services providers have started making efforts to transition from physical offices towards location independent secured networks. These secured networks will then help the service providers to provide services without the need to be physically present at the company offices and the official work can be completed by the employees from remote locations using secured networks.

Automation of the Existing operational systems

With the pandemic forcing the workforce to shift working station from their offices to their homes, the pressure on the departments of operations and administration increased manifolds. The efficacy of the existing operational back-end system came into question. It also highlighted the age old practices of the systems which caused delays and red-tapism in providing smooth services to the customers.

The operations of the banking services are still plagued with such red-tapism. The processing of the documentation even in small-small tasks has to be monitored and processed from a line of workers. This adds a lot of pressure on these services when a complete lockdown is imposed and workforce is trapped in their homes.

This got the financial services providers thinking to come up with such processes wherein this cumbersome, manual, slow-paced process shall be automated and the burden of availing these services on the customer shall be reduced. This will also fasten the speed of delivery of such services which shall bring in more customers for these service providers and the industry will enter the future of financial services.

Tailor-made Insurance services

The insurance companies during the pandemic realized that they need to reshape their way of providing services to their customers. The changes introduced in the lifestyles of the customers in terms of personal finance, health and other uncertainties has forced the insurance industry to shape their products in a certain manner which will be entirely different from the previously offered homogenized ones.

Insurance companies have realized that the perception of security differs from person to person and the companies need to offer custom made and unique products which actually cater to the needs of their customers. For example, the automobile insurance providers reduced the premiums needed to be paid by their customers because of less number of driving hours during the lockdowns, premiums of health insurance were decreased because certain non-essential medical surgeries were removed from the scheme of health insurance etc.

The insurance products in the coming times will be designed according to the needs and existing conditions of the customers. For example, premises which are well built and equipped with the safety systems shall be required to pay less premium compared to those who are not equipped with these safety systems.

When insurance companies will come up with such custom made services then there will be huge volumes of data which needs to be processed and this may require too much of workforce rendering it too expensive. As a result, the processing of such huge volumes of data shall be automated using artificial intelligence and machine learning.

Upgradation in ‘Work from Home’ services

The speed with which the service providers shifted from physical offices to work from home, the supporting apparatus could not keep pace with the disruption taking place in the working space. There were complaints from the service providers with respect to the internet connectivity, bandwidth issues, security lags, difficulties in interaction etc. These shortcomings will the pave the way for innovations and research and development in this field in the coming times and become the future of financial services across the world.  

Conclusion

As the nature of delivering financial services changes and transforms from physical to remote delivery of services, certain services will undergo a paradigm shift to cope up with the remote working conditions. These changes will come in the form of trading softwares enabling remote stock broking services where the trader is not required to go to the company’s physical office, tailor made insurance services, cashless and digital banking, automated back-end operations and the supporting infrastructure by using of secured networks, high internet speed, increased bandwidth, data analytics tool etc. These services shall pave the way to future of the financial services.

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