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Digital platforms, characterized by their technological prowess and user-centric design, have become instrumental in reshaping how financial services are accessed, delivered, and experienced. Banks and institutions worldwide are implementing innovative technology solutions into their digital platforms with the purpose of revolutionizing the financial services they offer to customers.
From the rise of seamless online banking experiences to the integration of cutting-edge technologies, these trends reflect a commitment to innovation, efficiency, and meeting the evolving demands of tech-savvy consumers. So, what digital platform trends for the BFSI industry will dominate in 2024? Let’s find out!
Low-code and No-code Banking Platforms
In the highly competitive landscape of e-banking, businesses are constantly on the lookout for innovative solutions to streamline their processes and minimize risks in traditional software development.
Low-code or no-code platforms have emerged as an alternative to traditional software architectures, enabling BFSI organizations to accelerate the development of cloud-based apps. No-code development platforms (NCDPs) and their low-code counterparts (LCDPs) empower both developers and non-technical users to create software using intuitive visual interfaces and pre-built components with minimal coding knowledge.
According to ACM Queue’s research, low-code development can accelerate the overall development time nearly ten times with 1/10 resources. Additionally, Gartner anticipates that by 2025, approximately 70% of new enterprise apps will be developed using low-code solutions. Therefore, in the ever-evolving landscape of the BFSI sector, a low-code banking platform allows for quick adaptation to market demands and changing customer preferences.
Cloud-based Digital Platform
Nowadays, the BFSI sector relies heavily on the speed at which financial data can be processed. With a myriad of daily online transactions happening worldwide, the existence of high-performance systems is essential. This explains why numerous financial services companies have invested substantial resources into developing cloud-based digital platforms.
McKinsey reports that, by 2030, cloud adoption could generate $3 trillion in EBITDA value. Moreover, cloud services specifically tailored for the financial sector are projected to experience an annual growth rate exceeding 24 percent in the forthcoming years.
Within the fintech sector, three noteworthy trends in cloud computing are discernible.
- Edge computing and edge cloud
Edge computing and edge cloud represent a software architecture philosophy centered on the decentralization of data storage and processing. The use of edge devices that keep data locally facilitates more rapid decision-making. It is essential in financial markets when every fraction of the second matters.
- AI-cloud integration
Implementations of AI-cloud platforms are on the rise in areas such as biometric authentication technology and speech recognition technologies. This advancement enhances the user experience in fintech products.
- Cloud containers
This concept, functioning akin to a multi-tenant architecture, has been widely adopted by numerous technology firms in cloud storage. This technology enables the concurrent operation of multiple workloads on a single operating system instance, lessening hardware burdens and enhancing the overall efficiency of financial cloud services.
Regulatory Technology (Regtech) in Banking
The BFSI sector stands out as one of the most rigorously regulated industries worldwide. RegTech is anticipated to bring significant changes to the regulatory framework, offering advanced technological solutions to address compliance challenges in developing digital platforms.
The rise of RegTech is swiftly reshaping the financial sector, driven by businesses aiming to enhance their compliance and risk management practices. The global regtech market size is forecast to increase significantly from $12.82 billion in 2023 to $60.77 billion by 2030, at a CAGR of 24.9% during the forecast period.
These cutting-edge technologies provide deep insights into compliance issues and allow banks and financial institutions to detect potential regulatory infractions, alert employees to suspicious activity, and automate tasks. For instance, many businesses have implemented blockchain for identity verification, electronic Know-Your-Customer (e-KYC) processes, and transaction monitoring to ensure data security.
Nowadays, KYC has become an integral aspect of banking regulations, rendering the manual verification process obsolete. Through RegTech, this verification is now digitized automatically and can be completed in under three minutes.
Digital Lending Platform
With bank technology investments estimated to rise steadily by 5.2% in 2023, banks continue to make tremendous strides in digital lending. Now more than ever, lenders need digitized capabilities to efficiently manage lending processes and automate end-to-end operations – from loan origination to eContracting.
The digital lending platform automates the journey from application to disbursement for any lending product—be it mortgages, consumer loans, or deposit accounts. With the digital lending platform, potential lenders can use any device to apply for loans. Some benefits of digital lending platforms include:
- Deliver exceptional customer experiences
Modern customers expect their bank to be accessible wherever they go. Offering a unified digital lending experience across all devices allows customers to initiate applications in one channel and complete them in another.
This digital platform also helps deepen customer relationships by using data collected to provide more attractive offers.
- Accelerate innovation within a low-code approach
Almost all top popular digital lending platforms are cloud-based. They come with a modular architecture that enables banks to develop new digital loan products and quickly release them, all without writing a single line of code.
- Reduce lending costs
Digital lending platforms not only cut down on labor expenses by automating manual tasks but also substitute costs associated with mailing paper documents, linking account data, and utilizing e-signatures. The reduction in loan cycles further enables banks to realize additional cost savings related to interest rate hedges and warehouse lines.
Robotic Process Automation (RPA)
Robotic Process Automation, commonly known as RPA, employs software robots or "bots" to automate repetitive and rule-based tasks. Recently, RPA has emerged as a crucial tool for enhancing operational efficiency and elevating customer experience in digital platforms. According to AIMultiple research, approximately 80% of leading finance managers and CFOs are projecting or have already adopted RPA in digital banking solutions to improve financial management.
By deploying RPA, banks can automate diverse back-office functions, comprising data extraction, transaction processing, and compliance checks. Moreover, the adoption of RPA not only reduces the risk of human error but also expedites processes. The financial implications are substantial, with the automation of routine tasks leading to considerable operational cost savings.
A notable example of RPA implementation is loan processing in a digital lending platform, a task that traditionally spanned several days but can now be accomplished within hours.
Decentralized Finance (DeFi) Goes Mainstream
The rise of decentralized finance (DeFi) platforms, which enables individuals to access financial services and bypass conventional intermediaries directly, is another prominent online platform trend. According to Statista, the revenue in the DeFi market is anticipated to reach US$37,040.0m in 2028.
The DeFi initiatives are poised to enhance and expand their range of services, comprising lending, borrowing, and insurance services. As these initiatives evolve, they are expected to draw a more extensive audience and disrupt the conventional financial system. Fintechs hold the potential to play a significant role in shaping and promoting the development of DeFi.
Some DeFi-based services include:
- DeFi-based lending and borrowing platforms: offer individuals and businesses access to alternative capital sources.
- Payments and remittances: Fintech corporations may utilize DeFi to design innovative payment and remittance solutions that are faster, cost-effective, and more inclusive compared to traditional methods.
- DeFi-based wealth management services: enable users to invest in decentralized assets and protocols.
Financial LLMs Applications in Digital Platforms
The financial industry is undergoing a paradigm shift with the integration of cutting-edge technology, particularly Financial Large Language Models (Financial LLMs), into digital platforms. LLMs are forecasted to be adopted widely as they assist in elevating automation levels and enhancing current processes and technology-driven solutions. Here are some use cases of LLMs in financial services platforms:
- Automated financial analysis
Financial LLMs on digital platforms automate the process of financial analysis by comprehensively interpreting complex financial data. This application facilitates quicker decision-making and strategic planning for businesses and investors.
- Fraud detection enhancement
Financial LLMs contribute to advanced fraud detection on digital platforms. Their ability to analyze textual data patterns aids in identifying unusual behaviors and potential fraudulent activities, enhancing overall security measures.
- Risk assessment
This technology can be used to assess the risk of offering financial services to users through the comprehensive, automated analysis of their financial history, credit score, and other factors.
Sum Up
As we look ahead to 2024, it is evident that digital platforms will continue to play a vital role in our lives and the business landscape. By embracing the top digital platform trends, businesses can unlock new opportunities, reach a wider audience, and stay competitive in the increasingly digitalized world.
Embrace the future of digital platforms and discover how your business can leverage their potential for success. Stay ahead of the competition and position yourself at the forefront of innovation by integrating digital platforms into your strategy today with KMS Solutions’ development team. Contact us now!
