The financial services sector is not new to digital transformation. But the investments in digital finance and the extent to which digitalization is embraced has definitely been accelerated in recent years.
In this article, we look into what is digital finance, what are some examples of digital transformation in the finance industry, as well as the benefits of finance digitalization. Read on to find out more.
What is digital finance?
Digital finance refers to the process of transforming traditional banking and financial services through the use of new technologies. Specifically, using digital products and tools to deliver financial services.
What are examples of digital transformation in finance?
Like with most industries out there, digital transformation has had a large impact on financial services as well. Some examples of technologies and solutions that are driving financial services digitization are mentioned below.
Increased use of online/mobile banking
Digital banking is not a new concept. In fact, it’s been quite popular with younger audiences for a while. But recent events have significantly increased the use of online banking. When visiting their local bank branch was no longer an option, more and more turned towards digital banking. This has led to more people getting comfortable with digital transactions, like online payments and transfers – and have even started to prefer them.
The emergence of challenger banks
In the past years, more of the so-called challenger banks have emerged. These are fully digital banks, with no physical branches. They challenge the traditional banks, by making the customer experience smoother – from the ease of opening an account to better functionality and more attractive fees and rates. Some examples of such challenger banks are Revolut, Lunar, and Monzo.
Fintech solutions
Fintech companies are also changing the financial services market. They provide a variety of digital services, from spending tracking, budgeting, to customer service chatbots and more. With more and more financial institutions relying on fintech solutions, these companies have been essential in driving the digitalization of financial services.
Digital investments companies
Algorithm-based investment management and digital financial advice platforms are also increasing in popularity. Their ease of use and ability to offer more attractive fees are just a few of the reasons why more consumers are preferring them over traditional investment companies.
Blockchain technology
Another technology boosting digitalization in finance is blockchain. It provides new opportunities to identify, record, and store assets digitally, as well as changes the way people invest their resources and trade on markets. Blockchain technology’s impact is still unfolding and is likely to play an even bigger role in the future of financial services.
What are the benefits of digital finance?
1. More efficiency
Digital tools were created to help us work more efficiently, by removing the manual time-consuming work out of the equation. Relying on such solutions enables employees in financial institutions like banks, pension funds or insurance companies to improve their productivity and focus more on value-adding tasks.
2. Increased security
The finance industry is subject to security and compliance requirements and with good reason. They often process and handle sensitive and confidential information. Most finance automation tools are built with these requirements in mind, making them a good choice for the needs of financial service providers.
3. Improved customer experience
Customers nowadays expect a digital, smooth experience by default. Their interactions should be effortless and at their own convenience. With the market becoming more competitive, financial institutions need to invest in digital tools to keep their customers satisfied and provide the level of service they expect.
4. Insights & analysis
Financial services providers typically have access to and handle large amounts of data, which comes with great potential. But without the tools to analyze it, that data is not of much help. Digital solutions provide financial institutions with clean data and actionable insights, which can be used to identify new business opportunities and grow.
How Penneo helps financial institutions on their digitalization journey
Penneo helps companies in the BFSI sector to streamline some of their most time-consuming client-facing processes: document signing and KYC verifications.
Penneo KYC
With Penneo KYC, you can say goodbye to insecure and messy Excel sheets. The tool enables you to automatically identify clients and their beneficial owners, verify their identity, automatically screen clients against PEP and sanctions lists, conduct client risk assessments in compliance with national AML legislation, securely store data, and demonstrate your compliance to authorities with the help of a comprehensive audit log.
Penneo Sign
Penneo Sign enables you to automate complex signing processes in a secure and compliant manner. The tool supports various eIDs, such as MitID, .beID, Swedish BankID, Norwegian BankID, Finnish Bank IDs, and itsme®. The signatures created using itsme® meet the eIDAS requirements for qualified electronic signatures, while the signatures created with the other eIDs are advanced electronic signatures.
In addition to providing legally binding digital signatures, Penneo Sign ensures GDPR compliance, offers a comprehensive overview of the entire signing process, facilitates document routing to signers in a specific order, and sends automatic reminders to ensure deadlines are met. These features, along with many others, make Penneo Sign a robust and efficient solution for managing digital signing processes.
