Source: Financial Tech Review
Challenges in Financial Industry
Financial services industry is witnessing radical transformation since the past few years. Whether it’s insurance, banking, wealth and asset management, or Fintech, the industry is scrambling to satisfy the evolving needs and expectations of consumers , suits complicated regulation also as drive innovation within the organization.
Here, we are discussing the key challenges facing the financial services industry:
Increasing Complicated Regulatory Environment
It is already known that financial services are among the foremost heavily regulated industries within the world. 2020 will witness more specialize in compliance in terms of how firms are collecting and using customers’ data. The uncertainty around Brexit also indicates that financial services organizations got to be prepared for various sorts of scenarios- the impact on capital requirements, short term market volatility, and adjustment on pricing strategies.
Trust within the traditional banking model is declining. Regulatory policy, including open banking initiatives, has enabled challenger organizations to enter the market, driving the evolution of customer choice. These organizations generally charge customers low fee, provide more efficient products, and faster services through their customer-friendly digital interfaces. the most benefit for these challenger organizations is that legacy systems don’t restrict them, in order that they are often flexible to reply more quickly to changing customer needs.
Cybersecurity and protection of customer data are considered as a top challenge for financial institutions over the last five years. The evident increase in cyber attacks within the industry can cause unrepairable damage to the business and therefore the brand. Besides this, card payment scams are still an enormous threat for financial services firms trying to stop fraud.
Challenges in Banking Industry
The banking sector goes through a drastic shift, driven by rising competition from Fin-techs, disruptive technologies, changing business models, and mounting regulation and compliance pressures. However, the rise in data breaches, changing regulatory and compliance requirements, and privacy policies have posed several challenges for the banking system .
Let us check out the challenges facing the banking industry:
The growing prominence Fin-techs have posed a threat, targeting a number of the foremost profitable financial services areas. Goldman Sachs predicted that these startups would account for quite $4.7 trillion in annual revenue diverted from traditional financial services companies.
Financial services customers expect meaningful and personalized experiences through simple interfaces on any device, at any time, and anywhere. Although customer experience are often hard to live , customer turnover is tangible. Banks can win customer’s trust and loyalty by knowing their customer and their expectations. Also, implementing an ongoing client-centric approach might help.
Today’s consumer is smarter, tech-savvy, and more informed than ever before. They expect a sort of banking experience that’s tailor-made and convenient. Changing customer demographics play a big role in these heightened expectations. Today’s generation has an innate understanding of technology. As a result, banks are striving to enhance digitized experiences. Millennials have accelerated the charge to digitization. Hence, the utilization of mobile banking has increased dramatically.