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Navigating the waves of change: Trends shaping the future of BFSI in an era of transformation

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By Subhasis Bandyopadhyay, Vice President – Global BFSI Domain Head, Happiest Minds Technologies

In the face of heightened financial volatility, BFSI companies are not just weathering storms but seizing
opportunities for transformative growth. This era of uncertainty catalyzes a strategic digital evolution within the BFSI sector, where adaptability is the key to unlocking new horizons.

Subhasis Bandyopadhyay

Embracing this evolution, BFSI entities proactively expand capacities through a digital lens, redefining operational paradigms for agility and foresight. The dynamic FinTech landscape plays a pivotal role as established institutions engage in collaborations focused on customer-centric innovation.

Here, we explore some trends that will shape the future of the BFSI industry—from the democratisation of AI to sustainable initiatives and disruptive changes in payments.

1. Digital Transformation in BFSI: Change the Bank OverRun the Bank
Digital banking: The focus on changing the Bank indicates a shift towards transformative technologies. In digital banking, we’ll see advancements in AI-driven customer service, personalised financial advice, and seamless omnichannel experiences. The integration of chatbots, voice assistants, and AI algorithms will enhance customer engagement and satisfaction.
 Commercial lending: The digital transformation in commercial lending will involve the adoption of machine learning models for credit risk assessment, blockchain for smart contracts, and automated processes for loan approvals. This aims to streamline operations, reduce costs, and provide quicker financial solutions for businesses.
 Cards and payments: Innovations in this sector will include contactless payments, tokenisation,
and increased security measures using biometrics. The development of digital wallets and real-time payment systems will reshape the landscape, emphasizing speed, convenience, and security.
 Treasury operations: Disruptive technologies like blockchain will play a significant role in transforming treasury operations. Smart contracts and decentralised finance (DeFi) solutions will optimize liquidity management, enhance risk mitigation, and improve overall efficiency in financial transactions.

2. Sustainable technology in BFSI: Supporting ESG outcomes
Sustainable technology initiatives will involve the development and implementation of digital solutions
that contribute to environmental sustainability, social responsibility, and governance. Blockchain can be
employed for transparent supply chain finance, and AI algorithms can aid in ESG data analysis, helping
institutions align with global sustainability goals.

3. Democratised GenAI in BFSI: Mass accessibility
The convergence of pretrained models, cloud computing, and open-source platforms will democratise access to generative AI. BFSI intermediaries will utilize these technologies to create personalised financial products, optimize risk management, and enhance fraud detection, making advanced AI capabilities available to a broader range of financial professionals.

4. Evolution of global capability centers (GCC):

 Asset light transformation: GCCs will increasingly focus on monetising their capabilities while
containing costs. This involves leveraging cloud services, outsourcing non-core functions, and
embracing innovative technologies to optimize operations.

 As a service model: GCCs will transition into hubs for delivering services as a service, emphasizing customer success. This shift involves providing scalable and adaptable solutions That align with the growing trend of businesses preferring outcomes over ownership.
 Gen AI paradigm: In the post-Gen AI era, GCCs will seek expertise in Generative AI, fostering collaboration between humans and AI for complex problem-solving and creativity.

5. Payment industry disruption: Platformification and global initiatives
 Platformification: The payments industry will witness a trend towards platformification, exemplified by initiatives like Finastra’s Fusion Fabric cloud. This approach enables the consumption of services from a broader partner ecosystem, fostering innovation and collaboration within the industry.

 Global Initiatives: Local, regional, and global payment initiatives such as UPI, FedNOW, P27, and ISO 20022 standardisation will continue to disrupt the payments landscape, emphasizing interoperability, speed, and security.

6. Digital Experience Platform (DXP) and Cloud Data Platform (CDP): Channel Diversification and
Hyper-Personalisation
 Channel diversification: The year 2024 will demand diversified channels for BFSI, integrating social commerce experiences and data-driven hyper-personalisation. Digital Experience Platforms (DXP) and Cloud Data Platforms (CDP) will be pivotal in enabling seamless and personalised interactions across various lines of business (LOBs).
 Hyper-personalisation: BFSI institutions will leverage advanced analytics and AI to provide hyper-personalised services, tailoring financial products and experiences to individual customer needs. This includes personalised recommendations, targeted marketing, and adaptive customer journeys.

For BFSI enthusiasts, the outlined trends provide a clear roadmap in the digital era. Embracing these shifts is not just advantageous; it’s essential for success in a dynamic industry. Collaborations between BFSI giants and FinTech innovators highlight the need for adaptability and a customer-centric mindset. Aligning with these industry trends positions aspirants as pioneers, driving innovation in an ever-evolving sector. In conclusion, the message is clear: those who embrace digital transformation, sustainable practices, and customer-centricity are not just surviving; they’re thriving.

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