5 Key Threats to Finance Industry that Business Must Prepare for
FinTech/non-bank startups are altering financial services’ competitive environment, pushing conventional banks to rethink their business models. Regulatory and enforcement standards are becoming more stringent as data breaches become more common and privacy issues grow. If that wasn’t enough, consumer preferences shift as customers demand personalized service around the clock as they leverage the Fintech solutions providers.
The technology that has caused this disruption can help solve this and many other banking industry problems, but the transition from existing systems to disruptive solutions hasn’t always been easy. However, if banks and credit unions are to survive and prosper in the new climate, they must embrace the digital transformation offered by Fintech solutions.
#1. Tech Updates
As seen in the commercial insurance industry, mergers and acquisitions may result in obsolete information technology systems combined or inherited.
The expense of integrating old technology systems from disparate companies may be prohibitively expensive. Inadequately coordinated information systems may generate many concerns, including the possibility that a cyber assault might go unnoticed for months owing to poor managerial visibility into information technology operations.
#2. A Cultural Shift
The technology is now integrated into our society, extending to the banking industry, from artificial intelligence wearables (AI) that track user’s health to smart thermostats that allow you to change the heating setting of internet-enabled devices.
There is no need for manual processes and structures in the modern world. Banks and credit unions must consider technology-based resolutions to the problems of the banking industry.
Therefore, financial institutions must foster an innovation culture in which technology can maximize productivity in existing processes and procedures. This cultural change towards a technology-first approach reflects the greater implementation of electronic transformation across the industry.
#3. Cybersecurity Threats due to Ransomware
With ransomware being a popular extortion technique for criminal actors in recent years, comprehensive response and recovery and absorption procedures are critical, given the enormous damage that a financial institution may suffer from an irreversible loss of data. Given how successful (and lucrative) ransomware has proved to be for cyber thieves, we anticipate that ransomware will continue to have been a strong favorite. The best approach to safeguard your data against ransomware attacks is to implement strict data backup and retention procedures, with a particular emphasis on ensuring the high availability of your system in the event of an IT disaster.
#4. Running a Reputation Risks
It’s impossible to quantify how many fake accounts were established to sell consumers unneeded insurance, but the sheer number of them is staggering. Many people have raised questions about whether Wells Fargo officials should be removed from their positions and be penalized in addition to having their bonuses taken away. Today, consumers are more intelligent, knowledgeable, and educated than ever before and demand a high level of personalization and comfort from their banking experience. The reputation risks are high because they may lack clarity.
In these higher expectations, changing consumer dynamics play an important part: with each younger breed of banking customers, there comes a more innate awareness of technology and an enhanced expectation using IoT solutions for a better digital experience.
It is banking that has a case of the reputational risk flu, with head executives continuing to get outsized pay and benefits with lackluster interest rates given to depositors.
#5. Inadequate Resources Redeployment as a result of a lack of vitality
If a business wishes to employ mid-year staff, they need to start the hiring process early in the year. But this is where resource optimization will need to take over.
While the need for workforce redeployment may occur in any business in any area, it is especially critical in the information technology industry, where employment is primarily project-based, and redundancies are frequent. Apart from that, since the IT environment evolves quicker than any other, the life cycle of companies and talents is also becoming shorter.
A critical factor in deployment is whether top management believes that a specific company is experiencing a temporary or persistent slump.
How can CSE help Enterprise?
With so many obstacles to deal with in the banking industry, charting a clear path forward can seem daunting — but with the right team behind you, digital transformation is possible.
Since 2007, CSE has been providing investment banking team has assisted banks or credit unions in unlocking digital interactions through the Microsoft platform. We recognize the specific challenges commercial banks face and have built the technology to overcome them with a range of products and services targeted to the financial services sector, such as Engage for Finance and Retail Banking Sales Insights.
CSE helps the company overcome banking industry issues and embrace digital transformation, from data science skills to business intelligence, AI, and beyond.