The banking industry, like any other vertical in recent years, has undergone huge transformations with the advent of new technologies like the cloud and big data. All of these new tools come together to give banks the information they need in order to conduct loan pricing activities accurately and effectively within the constantly changing regulatory landscape.
"Banks now use the IoT to collect data and support mobile strategies."
Computerworld UK contributor Matthew Finnegan noted earlier this year that banks and tech giants like IBM, Google and Apple would need to learn how to coexist with banks in 2016 as the latter two begin to stake their claim in the finance industry with payment apps and mobile wallets. In addition, banks are slowly but surely starting to use the Internet of Things to collect data and support their mobile strategies. The IoT, which is the connected web of sensor-enabled objects like smart thermostats and smart crock pots, manifests in several industries, including financial services, as a way to gather consumer data.
"When IoT crosses with finance, we suddenly get an explosion of data," said Mike Laven, the CEO of global payment facilitator Currency Cloud. "It starts to get interesting when it comes to figuring out how to use that to great effect – and more specifically how to monetize the use of that data is something new fintech entrepreneurs will be looking to figure out [in 2016]."
What else does the future of financial technology hold? Let's take a look:
Mobile technology fosters flexibility
Financial services organizations are beginning to realize the significance of mobile technologies as more of them adopt mobile banking strategies and other important mobile applications. According to CloudTweaks, by 2019, 2 billion people will be using mobile banking applications, and another survey conducted by Harris Poll found that 87 percent of people aged 18 to 35 use mobile banking.
Mobile applications aren't just for consumers, either. Bankers can use them to price loans quickly at customer sites. By using mobile applications on the go, banks can access key insights even when they are outside the office, thereby improving efficiency, flexibility, and productivity.
The importance of analytics
The cloud is certainly a critical technology for today's banking systems, but it isn't the only trend taking the banking arena by storm. One area where the banking industry has an especially important opportunity to grow and expand is in using analytics to support risk-based pricing strategies. The aforementioned increasing use of the IoT has made it so that banks need to reevaluate how they collect and parse through data. Banks are using these kinds of tools to derive key insights from their customer base in order to enhance efficiencies and accurately price loans.
According to McKinsey & Company, in the 1980s and 1990s, the banking industry experienced massive change thanks to advancements in IT systems – and these organizations can once again transform by taking advantage of big data analytics.
"What you see is that almost every single major decision to drive revenue, to control costs, or to mitigate risks can be infused with data and analytics," said McKinsey's Toos Daruvala. "[W]e are now at the next frontier in terms of using both data and analytics to drive revenue generation through marketing, through next-product-to-buy, through lead-mining models like that, as well as to drive better risk decisions."
In today's ever-changing economic environment, therefore, it's becoming even more important to use analytic tools to conduct risk-based pricing activities. DealPoint software from Brilliance Financial Technology, for instance, allows banks to drill down into their customer data and glean insights that they can then use in the decision-making process. In addition, DealPoint's intuitive application harnesses the power of mobility in order to bring banks these insights on the go.
Contact Brilliance today for more information.