Top 6 Challenges of Financial Services Industry – Banking, Insurance & Retail

The finance industry has been undergoing a fundamental shift for many years. Innovative technologies and a rapid shift in the digital landscape are placing immense pressure on the banking, insurance, and retail sectors to adopt new technologies and grow.
Find the right combination of technologies to exceed customer expectations and stay competitive in the coming years. Now, more than ever, it is vital for financial services sectors to identify areas for their improvement and come up with innovative solutions to achieve success in this competitive environment.
The rise of FinTech mobile app development companies and non-banking startups is changing the competitive landscape in financial services to rethink the way they deliver services to customers.
These challenges can be resolved by using the latest technologies and developing banking and fintech mobile applications. But the transition to innovative solutions is not an easy one.
Here, we will discuss the various challenges that thrive in the current landscape of the finance sector and how we can overcome them.

Challenges of The Financial Services Industry

There are several challenges in almost every sector. But the finance service sector is seeking major challenges while adopting the latest technologies and switching over to mobile apps.
Let’s see six major challenges of the financial services industry and how switching to the latest technologies can overcome these challenges.

1. Evolving Customer Expectations

Today, there is no room for manual processes and systems because manual tasks are exposing organizations to the risk of error.
Finance sectors need to think of technology-based resolutions like- custom fintech mobile app development to deliver a better experience to the customers.
Still, most of the banking and finance sectors companies are using traditional methods to manage their customers.
With an increasing portion of online banking, customers expect seamless, personalized experiences across all channels and devices.
Whether it is developing customer-centric custom fintech mobile app development can help you in providing a state-of-the-art customer experience in the digital in a mobile-first age.

Read More: How Custom Software Development is Shaping The Future of Financial Services?

2. Maintaining Cybersecurity and Data Breaches

Cybersecurity and data breaches are two major concerns among the finance sector companies to keep their user’s/customers data safe.
With the increasing transactions, communication, and presence of sensitive data, financial services companies are the major target of cyber hackers and attackers.
As data breaches continue to be a concern in the financial industry, banking and finance sectors need custom finance mobile app development to enable end-to-end encryption that prevents third parties from accessing data and information.
Developing banking and fintech mobile applications helps you in dealing with the various challenges of cybersecurity and data breaches.

• Address Verification Services – when cardholders enter the billing address for a transaction then blockchain technology adoption in finance helps in identifying suspicious transactions and prevents fraudulent activity.

• Biometric Authentication – it is more secure and difficult to replicate when compared to PINs authentication. Banks and other financial service providers can use this authentication to secure customers’ accounts.

• Location Authentication – location-based authentication can be used in mobile banking to prevent fraud by enabling user device location to determine whether the person and phone are in the same location in which the transaction is taking place.
  

3. Regulatory Compliance in Finance

Since the 2008 financial crisis, regulatory compliance has become one of the most significant banking industry challenges as a result of the dramatic increase in regulatory fees.
Traditional banks must be evaluated constantly to improve their operations to meet their fast-changing customer expectations and demands.
There are a growing number of regulations that banks and credit unions must comply with regulatory compliance to correlate data from disparate sources with the help of FinTech mobile app development companies to pass a constant challenge.

4. Incorporating AI and Organizing Big Data

AI and Big data are the two latest technologies that help in enhancing customer needs and deliver a better customer experience.
AI is the future of financial services, and many companies that are thriving need to incorporate AI as soon as possible as it can automate customer verification, automate management, and ease the process of opening bank accounts.
It also alerts customers of any suspicious activity on the account. Data analytics are emerging with the potential to transform assets management, risk management, and other services by incorporating custom finance mobile app development can be beneficial by incorporating big data in the finance sector.

Read More: Rise in Adoption of Blockchain Technology in Banking Sector- Explained

5. Lack of Customer Retention

Customer loyalty is quickly becoming an endangered concept in the financial services industry.
However, customer loyalty is a product of rich relationships and knowing their demands and expectations from the service provider.
Today’s customers want more personalized and meaningful experiences through simple and intuitive interfaces.
Delivering personalized experiences, more automated services, and easy access to services can help service providers to retain their customers.
Chatbots in banking and finance are one of the tools that can deliver superior customer service to increase customer engagement.
Today, the majority of customers prefer virtual assistance for timely issue resolution.

6. Keeping Up with Latest Technology

Finance sectors are not adapting to the latest technologies and services and still rely on their basic software.
This is the main reason that the financial sector is not evolving and delivering a better customer experience. It is imperative that financial service providers catch up and keep up with the latest technology to improve efficiency at lower costs.
Today, every bank and insurance company are incorporating FinTech mobile app development companies that use AI and blockchain adaptation in the finance industry to adopt mobile banking strategies that are fast, easy to use, and secure.
It provides features like- live chat and voice-enabled digital assistance to deliver a better customer experience.

Conclusion

Delivering new ideas and a user-friendly experience to the customers is an innovative way to define your modern financial services.
Developing banking and FinTech mobile applications helps you to keep people connected with your various financial services.
Clavax Technologies aims at delivering the best business and innovation consultants to banks, insurance, and other financial sector companies that can help you to navigate emerging technologies using blockchain, IoT, AI, process automation, and much more to transform your financial business model.