BFSI stands for the banking, insurance, and financial services industries. It accounts for a significant portion of the multi-billion dollar economy, which comprises banking, insurance, and non-banking financial institutions. Besides, financial service companies such as Broking and Asset Management are primarily referred to by the BFSI industry. In this article, we will learn more about what is the BFSI sector.
Let us now discuss about what is the BFSI sector and the drivers of transformation in the BFSI sector
From AI and Blockchain-powered financial services to omnichannel banking, today’s world is experiencing developments in the finance and banking industry. Today that concentrates on revolutionizing BFSI processes by holding customers at the center of current and future tactics. Digital is the future of the BSFI sector, and digitalization is the critical component that runs and drives this digital revolution. It is now archiving all that is manual or paper-based and is translated into digital format. Such efficient processes allow banks to experiment with and explore business processes. Many disruptive technologies are in use today, such as robotic process automation, blockchain, cybersecurity, and artificial intelligence.
Fintech is a compelling platform for digitalization or financial technology. Because of the new technological developments at their disposal, fintech companies worldwide are evolving from the conventional norms of the BFSI market. The BFSI sector is now at the client’s pressure points and threats. Currently, the fintech industry is rising rapidly, with the ever-changing dynamic of customer needs and behavior.
Drivers of Transformation
- Digitization & Digitalization
The emergence of services like Internet-enabled banking, Real Time Gross Settlement, Transfer of National Electronic Funds, and IMPS has lowered operational costs. They help the front lines make less human mistakes than before and contribute to their profit margins.
- Cognitive Analytics and AI
Cognitive Analytics and Machine Learning facilitate information discovery and data-driven decision-making in all sectors of the business. To pull out insights from complex datasets, these technologies put the data in the center and analyze and process it. AI technologies help reduce the difference between the reality of actionable decision-making and Big Data’s purpose. The perfect data goldmine for Cognitive Analytics is the BFSI sector. Valuable insights from unstructured information can produce insights from unstructured data using Deep Learning, Predictive Analytics, and Machine Learning. BFSI businesses use customized insights such as offerings for consumers and customer-brand interaction.
- Robotic Process Automation
RPA technology is specially designed to mimic acts carried out by humans based on basic rule-based processes. An application’s user interface level can be dealt with by RPA systems. This is to emulate the exact steps efficiently in the same manner as those operating through several applications. RPA is cost-effective, fast to implement, and very scalable.
Blockchain is an evolving technology in the BFSI sector and is, therefore, capable of significant changes. In the financial and banking industries, blockchain technology has a lot of potential to create ripple effects. Banks not only collaborate with Blockchain and DLT specialized Fintech startups. But also promote cooperation between them as they realize that reciprocity is crucial to successful implementations of Blockchain.
- Fintech – Payments Banks Partnerships
By investing in Fintech and partnering with Fintech firms, Payment Banks aims for a long-term economic push. By removing intermediaries from the supply chain, PBs reduces transaction costs dramatically. PBs do not face the issues that conventional banks typically face when implementing new technologies. Therefore, it is likely to respond rapidly to customer preferences and industry shifts. PBs will tap into a much more extensive segment of the value chain due to their high versatility.
- Cyber Security
Anything that gets digitized becomes vulnerable to cyber threats and hazards. The BFSI sector faces the same threat. As cyber threats are continuously evolving, financial services companies and banks seek to tap into smartphone users’ vast demand. Therefore, banks have a unique digital wallet that offers a broad range of services and reduces the chances of cybercrime.