Financial services is an ever-evolving industry, and this evolution has taken a significant pace over the last few years.
Not surprisingly, digital transformation and innovation in space are key topics at this year’s Finovate Spring conference in San Francisco.
The conference began with a session led by three FinTech analysts on the changing financial services situation and the opportunities and developments that result from this change.
Jim Mortensen of the Aite-Novarica Group said that 30% of consumers registered for digital financial services for the first time beyond the pandemic, and 87% of them said they plan to increase their online usage, citing a recent survey. I proceeded with.
However, this increase has also led to a surge in cybercrime as malicious attackers are trying to target new digital users and new businesses.
According to Mortensen, Aite-Novarica’s survey of financial services professionals found that what many companies are concerned about is accessing user credentials and taking over new accounts in the name of others. It became clear that it was a synthetic ID that was sloppy and established, that is, a scammer. He adds that “about 30 billion records have been broken” in the last decade.
“This includes credentials and transaction data, as well as other information that helps fraudsters in terms of being able to hijack or create new accounts.”
Mortensen emphasizes an increase in approved push payment (APP) scams in the UK (Focused topics How the level of APP fraud has surpassed card fraud, which has historically been the largest area of criminal activity in the industry (at the recent Finovate Europe conference in London).
This, along with other scams such as phishing attempts, makes user authentication a top priority for many businesses.
Mortensen said: “When we surveyed financial services professionals, most people came back and said that the main areas they are investing in are identity verification, application control, and authentication, so they are the most. It’s an area of concern, and given the environment we’re in, I think it’s a good feeling. “
Alex Johnson, founder of Fintech Takes, has moved away from cybersecurity to discuss what he calls “deposit gentrification,” with the advent of Fintech and the increased use of application programming interfaces (APIs). Emphasized that it is now possible to develop multipurpose banking services. It has a variety of products and creates a radically new structure than the ones that existed before.
He states: “Instead, these are product categories. These are where we have to compete. They are what the basic work to be done in deposits and how they create new value for their customers. Described how it can be done. “
Johnson summarizes it into six basic tasks to be done within the deposit space:
- Earn (give customers quick access to incoming money, such as access to earned wages)
- Planning (use features such as budgeting tools and retirement planning to help customers understand their current and immediate financial future)
- Investment (long-term investment)
- Guess (short-term investment, usually with more risk and volatility)
“From a fintech product developer’s point of view, what they want to do is take advantage of all these features to design new products and experiences, and that’s what makes this really, really fast, this latest. Helped by the fact that we have all the technical infrastructure. Once upon a time, for example, if we tried to develop and launch a financial services product 10 to 15 years ago, it was really, really difficult. It took quite a while. Today you can do it really quickly. “
Johnson made all these products available via the API, and developers “try them very quickly and very cheaply, find new product combinations that work and appeal to consumers. I emphasize that I can “try”.
One example discussed is the fusion of savings and investment, where Johnson is looking for fintech apps rather than banking apps for products that offer both automated savings and stock market investment tools. Citing research that suggests.
Johnson concludes: “What consumers are telling us by voting on their feet is that the experience they are looking for. They are looking for a mixed, mixed-use experience.
“The impact of these new product categories on financial services is related to our goal of becoming a major financial account provider for as many customers as possible. And we can say that we are looking at the data. If you’re trying to reach that goal, you just need to provide more than a checking account. “
Finally, Javelin’s Mark Schwanhausser talked about the need for banks to provide their customers with better, more personalized information on how to build credit and how to build credit with integrated services.
He states that the reason this is important for banks is that “banks are on the path to digital maturity” and are moving from business relationships with customers to engagement relationships.
“We need something to get people back, but we need more than just checking their balance or looking for deals. Credit scoring is one of those major candidates. But in the end, what we want to go is that we need to prove to consumers that we are on their side and that we are looking for them. “
He emphasizes the importance of providing digital advice and cites a survey that suggests that 40% of consumers are currently using online or mobile banking to track their credit scores. Generation Z is particularly active in this area. However, he suggests that neither banks nor FinTech provide sufficient relevant information to help individual customers handle their credit scores better.
Therefore, this provides an opportunity for banks to engage better with their clients and provide them with tools and personalized advice to support their individual needs.
“Now we want to go where we are providing true insights with a positive spin. That’s what you have to do. This is where we start thinking to you. Here’s how to create a credit. And in the end I’d like to give you some advice. Today, advice usually sells you another product. It’s your financial. It’s not about health. “
He concludes that companies should strive to emphasize credit building over credit monitoring. “Telling people what your score is is another thing that helps them feel like they are in control of it and they are building their borrowing power. . “
He also suggests focusing on young consumers who want to learn more but don’t know where to start, companies should look more like financial coaches than “financial librarians”, and businesses should be personalized. He added that we should look to investing in data. To help customers connect points.
Changing financial services situation
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