Whether you are directly involved in the financial sector or not, it is always a good idea to keep track of emerging trends that may impact you and your business. They could mean opportunities or threats to your company. In our increasingly interconnected world, what happens in one industry can point to potential trends in other sectors.
Many industries are in a state of flux at present, especially as new technologies and business models are disrupting even the most established industries. Not surprisingly, most of the trends are technology related. Let’s look at some of the more prominent ones we are seeing in the financial sector today.
Mobility is a massive shift across all industries with finance probably topping the chart. People want to spend whenever, wherever, and however they please. This will change not only spending habits, but it can influence and transform entire industries.
Numerous digital payment methods have emerged recently and new ones are in the works. There is also the rise of non-bank Payment Service Providers (PSPs) which offer innovative services. According to ACI, cross-border sales accounted for 25 percent of total global eCommerce in 2015, reaching $300 billion. The rise of these alternative payment methods certainly helped. The lines between banks and customers are becoming blurred. New digital transactions could cause a dramatic change as to how and where consumers spend their money.
The increased demand for security is a trend that can be seen in most industries, but it is particularly significant in the financial sector. Security is a constant and ever-increasing threat, and major effort and expenses go into mitigating the risk. For example, Security Scorecard studied 7,111 financial institutions and found that 95 percent out of the top 20 U.S. commercial banks earned a network security grade of “C” or below. As mobility increases, more devices are connected to the Internet, and more opportunities arise for threats.
While this is nothing new, regulatory challenges and innovations are coming faster and fiercer than ever before. Organizations need to invest time and energy in understanding and adjusting to the ongoing dynamics of change. Failure to adapt fast enough could have dire consequences.
Previously emerging markets have been developing and are nearing maturity. Soon, they will be viable as opposed to growth markets. As they age, new ones will appear. This presents a great opportunity and possibly a few threats for some, especially those who do not see it coming.
With technology allowing anyone from anywhere to compete on a global scale, these maturing and new emerging markets are worth tracking. An understanding of both international, as well as local, regulations and practices can help you strengthen how you do business.
Changing demographics of an aging generation are expected to have a radical effect on finance. As the Telegraph reports, increasing life expectancies put strains on government funds while lower birthrates lead to fewer working citizens in many countries. As much as technology is driving the new solutions, the global aging populations will also affect the overall financial landscape.
Data analytics have become a powerful tool in planning, predicting, and modeling various programs. Because of the massive amount of data currently available, we can now glean accurate glimpses into consumers and their habits.
These insights have become powerful tools in planning, developing strategies, and improving service delivery for the modern business. The effective use of analytics can give an organization a competitive advantage. Enterprise Resource Planning, particularly ERP finance, can help ensure that data analytics are up to date, relevant, and simple to understand in order to streamline daily business operations.
Changing Customer Relationships
Despite an increasing use of technology, the need for personal connections built on trust is greater than ever. Customers are a lot more involved in their finances and want more control over relationships. More personalization and flexibility will be required for the technology to remain attractive to the consumer.
Trends are critical; business leaders must keep an eye on them as they evolve. By being aware of and understanding how trends shape the global financial landscape, you will be in a stronger position to manage any shifts that might impact your finances.