Digital Finance: Examples and Benefits

The financial sector is familiar with digital transformation. But investing in digital finance and the extent to which digitization is being embraced has certainly picked up speed in recent years.

In this article, we will look at what digital financing is, some examples of digital transformation in the financial sector, as well as the benefits of digitizing the financial sector. Read on and learn more about it.

What does digital economy mean?
Digital finance refers to the process of transforming traditional banking and financial services by leveraging new technologies. More specifically, the use of digital products and tools to provide financial services.

What are examples of digital transformation in the financial sector?
As in most sectors, the digital transformation has also had a major impact on the financial sector. Below are some examples of technologies and solutions that are accelerating the digitalisation of the financial sector.

Increasing use of online / mobile banking
Digital banking is not a new concept. After all, it has been very popular among the younger audience for a while now. But thanks to recent events, online banking has boomed. When it was no longer possible to visit the local bank branch, more and more people turned to digital banking. This has made many familiar with and even prefer to use digital transactions, such as online payments and transfers.

The emergence of challenging banks
Several so-called challenger banks have emerged in recent years. These are fully digital banks with no physical offices. They challenge (‘challenge’) traditional banks by making the customer experience more smooth – from easy to open an account to better functionality and more attractive fees and tariffs. Some examples of such challenging banks are Revolut, Lunar and Monzo.

Fintech solutions
Fintech companies are also changing the market for financial services. They offer a range of digital services from expense tracking and budgeting to customer service chatbots and more. With more and more financial institutions relying on fintech solutions, these companies have been instrumental in accelerating the digitalisation of the financial sector.

Digital investment companies
Algorithm-based investment management and digital financial advisory platforms are also gaining popularity. Their ease of use and their ability to offer more attractive compensation are just some of the reasons why more consumers prefer these mutual funds over their traditional counterparts.

Blockchain technology
Another technology that is pushing digitalisation in the financial world is blockchain. After all, it offers new opportunities to digitally identify, record and store assets and change the way people invest their money and trade in markets. We have not yet seen the latest in blockchain technology. It is likely to play an even greater role in the financial services sector in the future.

What are the benefits of a digital finance sector?

1. More efficient
Digital tools were created to help us work more efficiently. This makes time-consuming manual work a thing of the past. By relying on such solutions, employees of financial institutions such as banks, pension funds or insurance companies can improve their productivity and focus more on tasks with more value added.

2. safer
The financial sector is subject to security and compliance rules and with good reason. She often processes and handles sensitive and confidential information. Most financial digital tools are built with these requirements in mind, making them a great choice for the needs of financial service companies.

3. Better customer experience
Today, customers expect a digital and flexible experience as standard. When they interact with a company, it should be hassle-free and as they wish. With competition in the market getting tougher, financial institutions need to invest in digital tools to keep their customers happy and deliver the level of service they expect.

4. Insight & Analysis
Financial service providers typically access and process large amounts of data, which holds great potential. But without the tools to analyze them, this data is of little use to us. Digital solutions provide financial institutions with clean data and action-oriented insights that can be used to identify and develop new business opportunities.

How Penneo helps financial institutions on their digital journey
Penneo has developed two solutions that help financial institutions automate some of their most time-consuming customer-facing processes: onboarding new customers and document transactions.

Penneo KYC automates the manual work of onboarding new customers and executing the KYC process. The system guides users through the entire process, from risk assessment to documentation search and secure data storage. And at the same time, it ensures compliance with money laundering laws.

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