Over a couple of decades, one word that has taken the financial sector by storm is ‘Fintech.’ It has almost become the buzzword in the banking and financial sector, and anyone associated with this domain might have heard of the term in one or more finance-related discourses. However, for the ones who have never been introduced to this term before, Fintech refers to the use of technology across different financial services platforms and functions. To cite a simple example, the process of replacing paper bills with e-bills is Fintech at work. Therefore, if you were under the impression that Fintech always has to do with complicated financial and banking software, you could not have been more wrong. It is true that what we mentioned just now is also an integral part of the Fintech ecosystem. However, that is not all about it.
Until a few years ago, when the domain was new and not many people knew about it, Fintech was used in back-office functions for tasks like customer and database management, handling banking accounts with the use of software and the like. However, as days bled into years and the domain of Fintech evolved, it slowly transformed the ways in which banks and other financial institutions function. Today, Fintech has led to the disruption in the entire banking and financial services sector, and how! Now that said, in this article, we shall take a look at the different ways in which Fintech is causing seismic shifts in the financial services sector.
Chatbots Used for Customer Service:
It has been a few years since the chatbot first made an appearance, and ever since that, customer service has not been quite the same. For the uninitiated, chatbots are software that use NLP or Natural Language Processing and Machine Learning to understand human behavior and learn from them. Chatbots have found their application across several industries, and banks and financial institutions are now increasingly using them to enhance customer service and interaction. These chatbots reduce the pressure on human beings to interact with customers about little things and allow the financial sector to deploy the services of human beings where they are absolutely needed. For instance, chatbots can handle query requests, direct customers to the relevant departments and provide important pieces of information to customers.
Machine Learning and AI Helping in Fraud Detection:
More often than not, banks and financial institutions have to deal with fraudulent cases and scams in transactions. Therefore, amidst a hoard of other roles that banks and financial institutions have, having an active anti-money laundering team or software makes up to be an important one. Having said that, most banks these days use a combination of software and people to tackle the issue of frauds and scams. One of the most important ways in which Fintech is causing a revolution in the banking and financial services sector is by using the features of Machine Learning and AI to understand whether there is any potential threat to any of their systems. These systems investigate whether the transaction or attack is something to be really worried about. The entire process of investigation can be time-consuming. Therefore, depending solely on human resources to investigate the situation might not be wise or efficacious enough. Fortunately, Fintech steps right at this juncture and helps the situation. With the help of Machine Learning and AI in data aggregation platforms, unstructured transactions can be mined, and details of the same can be obtained in no time.
Rise of Omnichannel Banking:
Fintech has also resulted in the rise of omnichannel banking and helped financial institutions take care of various process like cash distribution with utmost ease. Bank activities are no longer branch-specific and have started permeating every digital channel. This has led to a reduction in brick-and-mortar banks and financial institutions. Fintech has made this possible, and now that the world is putting up a brave fight against a pandemic of epic proportions, the need for omnichannel banking is more than ever. Banks now do not need all their employees to report to work and dispense off their duties. Plus, these channels have also tweaked the efficiency of various banking services, and customers do not have to report to the branch to go about any banking process.
It can be asserted that Fintech is the future of banking and financial services. As the days pass by and technology keeps evolving, Fintech shall only expand and branch out in different directions. The discussion that ensued in this article proves that banking and financial services have started seeking refuge in various innovations in the domain of Fintech, and as the world progresses, more and more fresh innovations shall inundate the domain and change the financial landscape for the better.