How do banks and financial intermediaries put their digitalisation strategy into practice with software solutions?
The COVID-19 pandemic has accelerated digital transformation in pretty much every industry, and the financial sector is no exception.
Banking, insurance, investment, and wealth management spaces are all being reshaped (or even redefined) by the latest technologies and innovative disruptions, displacing traditional business models and processes. Everything has to be more digital, more online, and easier to handle remotely — for both employees and customers.
As a result, financial institutions have had to change not only the way they deal with internal, back-office operations but also how they interact with clients. The digital transformation, despite its challenges, has given these institutions the chance to shift away from their old, traditional departments towards more modern virtual platforms, reducing the number of costly physical service points that are needed. Plus, when the transformation is run wisely, it opens up new streams of revenue in the form of new customer-centred services.
But what kind of digital solutions do they leverage, exactly? Below, you will find a few powerful examples (that we, at Future Processing, are proud to be associated with).
Marketplace as a Service
One of the greatest examples of a digital transformation solution is Marketplace as a Service (MaaS) from 21finance, which offers banks and financial intermediaries the possibility to create and run their own digital online shop for financial products. The fintech’s customers can optimize their sales channels to increase assets under management, reduce operating costs, acquire new customers and ultimately open up new revenue channels.
MaaS works great for both financial institutions and their customers, including investors and issuers. Thanks to client confidentiality, a 24/7/365 help desk, data protection, full compliance, low service fees, transparency, access to a qualified partner network, very fast time-to-market, and much more — everyone gets a truly holistic experience, tailored to their individual needs. If wished, MaaS clients can co-place products across multiple marketplaces of banks, asset/wealth managers, and other intermediaries or book additional banking services such as crypto custody & brokerage, liability umbrellas, and many more.
Another great example of innovative digital solutions is blockchain-based systems. Designed to make the financial services sector noticeably less vulnerable to fraud and much more transparent — blockchain also allows customers to benefit from lower costs of services (thanks to, e.g., reduced fees). Systems like this are now being leveraged by financial institutions that have to deal with large datasets — in order to build and maintain data integrity and security.
Blockchain in finance- the main benefits:
- Better transparency, higher security: money transfers, payments, and other activities all become more traceable. Also, cryptographic algorithms secure the information flow between all parties involved.
- Bloom of the cryptocurrency market: blockchain lowers the threshold of entry for alternative digital currencies, and provides seamless exchange services.
- Faster payments: thanks to a decentralised ledger for payments, blockchain enables high-speed payments.
This technology is still being developed, perfected, and tested across many industries. However, it has already managed to transform the financial industry to a great extent.
Banking as a Service Modules
Banking as a Service Modules (BaaSM) is another solution offered by 21.finance — dedicated to marketplace operators (financial and non-financial organisations) and their issuers who want to integrate different banking services into their platforms and under their own brand. It’s an easy and flexible solution that benefits everyone.
Banking as a Service – top 3 modules:
- Crypto Brokerage: for trading digital assets (including cryptocurrencies). This also includes access to real-time market data and updates on market movements.
- Crypto Custody: provided by a BaFinlicensed bank, this offers the highest level of security for the trading of crypto assets, 24/7.
- Paying Agent Service: supports issuers in the calculation and payment of dividends, interests, and repayments, etc.
Operating within a platform that consists of customisable modules works great for both the financial institution and its clients.
Authentication and authorisation solutions
Enabling secure authentication and authorisation of transactions is a huge thing for every financial institution. Bearing this in mind, CoCoNet developed MULTIVERSA Token not only for mobile applications, but for desktop users as well.
Token apps – 2 safe solutions:
- The token app for smartphones holds the required RSA keys for user authentication and authorisation in all of the connected applications, such as banking portals. It supports biometric access modes, including fingerprint ID and face recognition.
- The token app for desktop, on the other hand, doesn’t need any other devices, and all private keys are securely stored on the user’s computer (with Microsoft Windows or Apple macOS systems), which makes things a lot easier. It fulfils the security requirements of PSD2 and complies with the EBICS standard.
Both MULTIVERSA apps replace complicated (and often very expensive) tools for user authentication and authorisation, without compromising security. Actually, just the opposite — they take security to another level.
There is more to do
The solutions mentioned above are some examples of the possibilities of new technologies that are constantly evolving and disrupting the financial industry. However, all of them when put together make financial services more secure, user-friendly, intuitive, transparent, and reliable for everyone in general.
Of course — not every solution will be a good fit for everyone, which is why it’s crucial to put your trust in good advisors and invest wisely.
The article was written with a contribution from Susanne Bichlmair, Head Of Marketing at 21.finance. The company was founded in 2017 and offers white-label software to banks and financial intermediaries, enabling them to operate their own marketplace.