The banking industry is constantly changing. Regulations shift, customer demands change and the global economy ebbs and flows, creating the need for banks to be able to adopt quickly in order to stay competitive.
It's this tendency for the banking world to fluctuate that necessitates the finance industry to become as mutable as possible – in order to survive a continually evolving market and field rapidly changing customer demands, innovation is key.
Let's take a look at some leading reasons why banks need to fully adopt innovative practices:
1. Regulations are always under revision
Innovation is particularly critical to the banking industry as organizations strive to maintain compliance with regularly changing regulations. This is especially true when the political climate is in flux as well.
For instance, the Dodd-Frank Act, the federal law enacted in 2010 that required banks to be more transparent and accountable in the wake of the recession, has recently come under fire from newly inaugurated President Trump's administration. While the outcome has yet to be decided, this is a clear example of how banks need to be capable of shifting focus and changing their in-house policies to accommodate movements in regulation.
"Banks need to embrace a truly innovative mindset in order to remain competitive."
2. Technology makes banking faster
Consumer demand necessitates automation in the banking industry because, in today's connected world, there is more competition than ever. Banks will need to provide a seamless transition between products and channels (digital and human) while enabling customers to self-customize their banking experience.
"In a mobile-first, socially enabled world, customers have become highly demanding and empowered," wrote ComputerWorldUK contributor Chris Boorman. "To attract and retain new customers, financial service organizations are increasingly being asked to build systems that adapt and evolve to customer demands."
Innovative solutions fintech organizations provide have a lot to offer banks in the way of customer relationships and demand management practices. In addition, it's often critical from a legal perspective – Boorman cited an incident wherein the Royal Bank of Scotland was fined 52 million pounds in 2012 for failing to upgrade its software, leaving millions of people unable to access their bank accounts.
3. The economy needs innovation in finance
Small businesses that would otherwise not have a chance to secure loans are being given an opportunity thanks to innovative solutions. For instance, according to Banking Technology contributor Katrin Herrling, technology helps small to medium-sized enterprises that would normally have been declined by bigger banks obtain funding by accessing more accurate risk assessment tools.
"To unlock additional funding, innovation has to focus on finding better ways to assess business risk, for example by gaining access to more timely and accurate transaction data, seizing 'big data' insights or leveraging the rise of cloud accounting to see 'live' business performance," Herrling wrote. "These innovations are making it possible for a much broader range of businesses to be funded on terms that are attractive."
Have the right tools at your disposal
Banks need to embrace a truly innovative mindset in order to remain competitive within the constantly evolving global economy. By investing in the right technologies, financial services organizations can maintain compliance with changing industry regulations, keep up with ever-more-stringent consumer demand and support the global economy itself.
Get in touch with the experts at Brilliance Financial Technology today for more information about how solutions like DealPoint can help banks become more innovative and adaptable.