Business How digital transformation impacts financial services

How digital transformation impacts financial services


Heather Altepeter is the Chief Executive Officer (CEO), founder and owner of National Association of Merchants (NMA).

A focus on digitization has become an essential part of modern business models, and this includes integrating technology with a company’s payment system. What was once a paper-based model has now evolved; with the decline of cash payments, many customers are turning to contactless payment options and streamlined e-commerce transactions. In fact, research shows it nearly half of the world’s population may opt for digital wallets by 2024.

To stay competitive, I recommend looking at how automation, payment integration, and other digital solutions can optimize your business processes and meet customer demands. Here are four ways to embrace this new digital landscape.

1. Streamline processes through new approaches.

The move from paper checks to digital payments has forced financial services companies to look at new approaches to customer needs. Payment processors have turned to new networks such as unique identifying tokens that use email or phone number to let customers share financial information and make electronic deposits while protecting sensitive information. These include using mobile remote deposit capture (mRDC)that allows consumers to process transactions in their own time, anywhere.

Digital-first shifts like this will only continue. As industry trends such as card-less transactions, online shopping and street pick-ups increase, we need to adapt. The introduction of mobile payment terminals, contactless payment options and efficient in-store pick-up options can increase customer satisfaction and give you a competitive advantage.

2. Prioritize security.

Digital transformation is changing the way we do business and cybercriminals are rising to the challenge. The US card industry will lose more than $165 billion to fraud over the next 10 years. For merchants, identity theft is one of the most common types of fraud just over 70%. This mainly occurs in transactions where the card is not present.

More than ever, our security measures must adapt as quickly as our technology. Taking proactive measures can help prevent fraud. Here are some steps you can consider taking action:

• Real-time validation of account ownership and payment options.

• Security code requirements.

• An audit of your site’s security.

• Confirming the legitimacy of the transaction through address verification or CVV requirements.

• Transaction limits.

• Collaborate with a trusted fintech supplier for all digital applications.

• Implementation of data and analysis tools to identify errors in addition to fraud and prevent process failures.

• Proper employee training on how to prevent and identify security vulnerabilities and potential scams.

• Have a trusted advisor, mentor, or network with whom to discuss strategy and best practices.

As a general rule, be suspicious when it suits you. All information, especially customer personal information, can be stolen. Proactive measures can help mitigate risks.

3. Prioritize digital payments.

According to MasterCard, a 10% reduction in check usage could lead the industry to savings $1.2 billion a year (registration required). Whether your business is B2B or B2C, you can increase efficiency and get paid faster by using digital payments. To start, look at your payment processes and any areas where work could be streamlined using automation or other digital technologies. Using a cloud-based accounting system instead of manually entering spreadsheets can ensure up-to-date data and faster payment processing.

From there, look for ways to remove manual payment processes, such as using paper checks. Digital billing and online payment options can help improve productivity and increase efficiency.

4. Keep up with emerging trends

Digital transformation has already infiltrated much of the fintech space. But in a time of continued disruption, what will be the next big trend to drive growth? Here are the key trends my organization has been following closely:

Integrated Finance: McKinsey honey that the use of embedded financing, or placing financial products in non-financial customer journeys, could double in size over the next three to five years. After all, embedded finance is driven by convenience and user experience. Just look at ride-hailing apps like Uber or Lyft, or customer recognition and promotion apps like Starbucks, where you can pay directly from your phone.

The humanization of banking: Banking is being humanized through AI, machine learning and data collection to create frictionless customer experiences. According to Business Insider, 80% of the banks are very aware of the opportunities presented by AI and machine learning, including the ability to impersonate a live agent through chatbot features, promoting easy access and authentication for customers, and more.

• Payment innovations: These include self-service kiosks, robot and droid technology, contactless payment options, digital wallets and immersive digital shopping experiences.

Privacy and security prioritization: This includes increasingly strict rules on how to handle customer information. Cyberattacks are still being considered one of the biggest threats for banks, and financial institutions must have robust cybersecurity programs in place, including firewalls, detection systems, and data encryption. In addition, fintech development should include risk assessments and data breach prevention mechanisms to protect data privacy in the event of a breach.

The continuously evolving payment landscape

Fintech companies have a fiduciary duty to protect consumers in a constantly changing marketplace. As digital trends impact current business models, I believe financial services companies will benefit greatly by relying on emerging trends, cybersecurity best practices, and streamlined processes to deliver the best possible experience to their customers. Business Council is the leading growth and networking organization for entrepreneurs and leaders. Am I eligible?

Shreya Christina
Shreya has been with for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

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