According to Gartner, 91% of businesses are engaged in some form of digital initiative, and 87% of senior business leaders say digitalization is their company’s top priority. The COVID-19 pandemic played no small role in this. Organizations were forced to adapt to the new realities, transferring employees to remote work and revising their service and document management approach.
The financial sector was one of the first to introduce information technologies into work. Over the past 10 years, applications have appeared that allow you to conduct some operations from the comfort of your own home. The open banking concept appeared. And even online banks that have no branches at all.
The development was slow, and only in 2020 did the digitalization of banks begin to develop rapidly—otherwise, it would have been impossible to retain clients in the new conditions.
As a result, the companies that managed to pick up the digital transformation trend were the winners.
Key points
Embedding digitalization in the global financial system
It took 70 years from the creation of the first bank card to active digitalization in the financial industry. In the 1950s, the first magnetic stripe cards appeared in the United States, followed about 10 years later by ATMs.
At that time, the term “digitalization” was not yet in use, but the first steps towards its future development were taken.
In the 1970s, the first electronic trading platforms began operating, and systematization and automation appeared on the NASDAQ Stock Market. For those years, this was a big breakthrough. It simplified financial transactions. In the 1970s, the over-the-counter stock market was unsystematized and risky, but the situation improved with the help of a single organized exchange. The technology of automatic order placement and execution allowed traders to arrange more trades.
Then, in the 1980s, special electronic means of processing banking information based on specialized microcomputers became involved. This innovation allowed credit organizations to reduce costs. It became possible to equip the workplace of a bank employee with a computer.
The 1990s were remembered for the formation of the “financial technology” industry (FinTech) in the global market and the emergence of a special ecosystem that brought together innovative solutions and technologies in financial products and services. This ecosystem included startups, technology companies, financial institutions, and infrastructure players.
The 2000s are characterized by robotization, visualization, and the mass spread of the Internet. Today, information is not only a tool for creating value but also a commodity in its own right. Now, information has all the properties of a commodity – to satisfy a human need and the ability to exchange.
How is the financial market changing now?
The spread of COVID-19 dealt a severe blow to the financial markets, causing the world to rethink the system and introduce new instruments.
During the coronavirus pandemic, Ukraine’s financial market showed its resilience and ability to support the economy. This was made possible by the National Bank of Ukraine’s policy in previous years of cleansing the financial sector of weak and unscrupulous players and making financial intermediaries more resilient to shocks of all kinds.
Recent changes to the financial system in Ukraine include:
- Accelerated digitalization. There is a new reality in the world that encourages the government to pursue systemic economic policies through digital transformation. The government is providing support for digitalization.
- Ecosystem transformation. This combines mechanistic (regulations, instructions, schedules) and organic (values, meanings, communities, networking) management approaches.
- Mass entry of citizens into the investment market. More and more ordinary citizens are investing in stocks.
The application of digital technologies leads us to global changes in the principles of providing financial services and interaction between companies and clients, as well as an increase in the volume and speed of transactions. By the way, we recommend you investigate Ukraine’s digitalization path.
Thanks to the active development and use of platform solutions, consumer habits in the financial market are also changing. With the spread of the Internet, financial services have become more accessible, positively impacting customer experience. However, digitalization inevitably leads to competition and competition for customers. And even those organizations that used to provide only financial services are reaching a new level and expanding their boundaries. Ecosystems are being created.
In an ecosystem, many companies interact with the client and are linked by a single concept of working with clients. The client is provided with a wide range of services of both financial and non-financial nature. Although the services are different – the firm is one. In this way, it is possible to reach a large audience and also to challenge market players with traditional business models.
Financial digital transformation leads to a new attitude toward money
Digital money is already a reality. Payments with plastic cards, phones, and watches are commonplace. And we hear about Bitcoin every day. By the way, Bitcoin is not the only one of its kind. In recent years, about 3000 private cryptocurrencies have been issued.
The emergence of cards and online payments has led society to the fact that the very approach to finance, the attitude towards it, the structure of financial systems, and even the nature of money have changed—cash is becoming a thing of the past.
Everything now points to the development of artificial intelligence and the great potential for further growth of digital financial services. 56% of the world’s financial organizations have already made digital transformation a core business strategy.
The prerequisites for the development of digitalization of the financial sector can be considered to be:
- Low margin of banking services
- Desire of banks to partner with startups and technology companies
- Loss of banks’ monopoly on traditional services
Thanks to this, banks are able to achieve good results and strengthen their position in the market. It is already known that digitalizing banking processes has reduced banks’ costs by 10-15%.
Cloud technologies allow companies to serve customers remotely, reaching a larger audience. Now, almost any routine process, from the execution of a transaction to the preparation and sorting of documents, can be automated.
How can SoloWay Tech help you with Digital Transformation?
If you need a partner for digital transformation in finance, you’re in the right place. Our team at SoloWay Tech has successfully completed numerous projects in the financial sector over the years. Our experts are highly skilled in digital transformation for education projects and financial services.
We start by thoroughly analyzing your business goals and studying the market. Our aim is to create solutions that not only compete but also integrate seamlessly into your daily operations. This way, our clients can elevate their business within months of launching a new solution, without needing to hire additional staff.
When you choose us, you can trust that your project will utilize the latest technologies and meet current market standards, no matter the competition.
Additionally, we prioritize the security of the products we develop. We adhere to widely accepted cybersecurity standards and policies to ensure your business’s unique needs are met. Feel free to contact us right now!
