Digital Transformation Trends Driving The Future Of Financial Services
Staying on top of the latest digital transformation developments in financial services is difficult! With so many trends to keep track of, it is vital to be aware of these shifts and their potential impact. We’ve been looking at the top tech trends in the finance industry that will drive digital transformation in 2023 and beyond.
What is Digital Transformation in Finance?
Olive’s Top Trends Driving The Future Of Financial Services in 2023 and Beyond;
1. Enterprise resource planning (ERP): Finance applications and microservices will challenge traditional ERP
ERP will be put to the test by finance applications and microservices. Big vendors like Oracle and SAP need to be nimble to avoid becoming roadkill on the highway of change. ERP vendors have already adopted digital technologies like automation, blockchain, and cognitive tools into their products—but that won’t stop competitors from competing. As new players enter the ERP space with specialized applications and microservices that sit on top of—and integrate with—ERP platforms, anticipate a change in the landscape. Adopting Cloud-based ERP will help companies stay ahead.
Finance is entering a golden age of technology. As cloud becomes the norm for ERP, finance applications and microservices will proliferate. You’ll be able to drastically reduce the complexity and cost of technology, without sacrificing functionality.
Deloitte – Finance 2025
2. Platform as a service
Platform as a service (PaaS): Organizations that use PaaS vendors can stay focused on designing and building new capabilities and features into their products, ultimately delivering those products to their clients faster. The platform-as-a-service (PaaS) market is predicted to grow by $ 37.36 bn during 2021-2025.
3. Collaborative technologies
With hybrid working still the norm, organizations will need technologies that seamlessly enable collaboration regardless of location. Businesses will leverage Digital transformation tools to manage work and coordinate with teams and stakeholders that are globally dispersed. Demand for digital transformation services will also become increasingly prominent in 2023 as remote work takes precedence over onsite collaboration in many industries.
4. Buy Now, Pay Later (BNPL) growth
According to research and interviews conducted as a part of the 2022 Commerce and Payments Trends Report, 2022 was predicted to be the year that BNPL became a mainstream payment method. BNPL is experiencing exponential growth: according to Juniper Research, BNPL payments are expected to account for nearly a quarter of all global e-commerce transactions by 2026, up from just 9% in 2021. It’s a payment type that attracts all audiences, particularly Gen Z and millennials.
5. Workforce skill change – focus on the future skills needed
2023 will see a continual focus on future finance skills needed – with particular emphasis placed on technical skills and roles such as data scientists, business analysts, and storytellers. Important future-orientated qualities include a strong customer service orientation, flexibility, and good collaboration skills—in addition to the technical capabilities needed for specific jobs.
6. Automated operations and finance will focus on Business Intelligence (BI) and service.
The potential of BI (business intelligence) technology is Data on Demand, which helps organizations to identify value drivers alongside growth opportunities and monitor financial/non-financial KPIs. In 2022, BI solutions will make real-time data handling fast and to the point. Growth optimization will occur across multiple dimensions of the financial organization. Financial organizations will have solid proof for future go-to-market strategies and better overall financial services.
7. Digital and mobile banking the new normal
The future of finance is digital and mobile-centric. Increased consumer demand for digital banking services has given rise to numerous technological advancements within financial institutions—with artificial intelligence (AI) at the core of these digital transformations. The rise of banking-as-a-service (BaaS) also increases digital services, as more legacy banks open up their application programming interfaces (APIs) for fintech and third-party app development. Digital and mobile banking will continue to grow in popularity, with activities ranging from budget queries to report production. Eventually, smart agents will learn what kinds of business information an individual needs and deliver that information proactively. Over time, data in spreadsheets will be replaced by visually rich information that is accessible and easy to use.
If you’ve been following crypto trends, you’ll have observed the development of decentralized autonomous organizations (DAOs), the rise of DeFis, and the valuations of NFT assets. According to Forbes, 2023 will see the following trends emerge:
- Governments will embrace blockchain technology: Blockchain technology can allow governments to conduct their business more effectively. As they continue to recognize the potential of blockchain technology regarding efficiency and public trust, governments will take advantage of its many benefits.
- Green blockchain: Blockchains are often criticized due to the colossal energy demands. Throughout 2023, we will see big efforts to make blockchain technology greener.
9. Artificial intelligence and Machine learning
Implementing Artificial Intelligence will become an increasingly vital business function in 2023, with hyper-automation leading the way. Essentially, this means that any repetitive task without the need for human supervision should be built into an automated process. Within a finance context, the following AI and ML trends are set to emerge:
- Conversational AI enhances client engagement: With an estimated 3,150% growth rate in terms of successful chatbot interactions, it’s clear that chatbots will continue to impact how business communication is conducted. Conversational AI will transform chatbots into extremely useful tools to help consumers.
- Influence of the metaverse (Web 3.0): The metaverse is still ambiguous, but there are some things that FinTech firms should look out for. Within the Metaverse, Crypto, NFTs, and digital tokens are growing exponentially.
Capturing the full value of digital transformation requires hard work to align and integrate data. In 2023, automation will make it easier to get the work done, but data problems will still be hard and tedious. Commas, abbreviations, data-entry fields, nomenclature, and hundreds of similar factors will slow down progress. This will require heavy lifting from COFs to fulfill complex requests.
Embracing FinTech and Digital Transformation in the Finance Sector
While it is promising to see CFOs embrace new technologies and digital transformation, remember that successful digital transformation is achieved by finding the right solutions for your company’s needs. High user adoption is the most important measure of success when implementing FinTech solutions. This creates a culture of change towards digital transformation and avoiding change management later down the line. Successful FinTech sourcing requires agility and collaboration to find solutions that will be highly adopted and drive drive digital transformation.
The Future of Financial Sevices
Financial services providers must make sure the organization is ready to implement the technology before investing further time and money in a fintech procurement strategy. Olive helps companies create a short list of suitable vendors with the right mix of expertise and credentials. Collaborative conversations with key stakeholders are key to success–companies should not give preference to any fintech solution based on any single factor or metric.
To be successful in finding the right fintech, companies must be agile, collaborative, and work together to avoid bias. Finding the right technology is about continuous agile collaboration with key stakeholders to ensure that you are procuring solutions that will actually drive digital transformation, managing all of your technologies to ensure they all feed up to the big picture. Olive lets you find the right solutions in collaboration with key stakeholders and vendors in one app, and in less time than a traditional RFP.