7 Trends You May Have Missed About Finance

 CFOs must pay attention to the major trends influencing finance in the future if they are to support functional change that will advance business objectives. CFOs intend a great deal of change in finance analytics, technology, and processes to future-proof the finance organization and propel business growth, but their priorities will probably be shaped by emerging trends.

 Here, we've highlighted seven trends that will shape future Finance. The financial organization as a whole does not have a rank order, but each position may have a significant impact on processes, talent, technology, organizational structure, and technology.

According to Craig Wilton, Senior Director, Advisory, Gartner, "dealing with these trends will help to focus strategic planning efforts for 2020 and beyond— and help CFOs develop the skills, capabilities and characteristics required for finance of the future."

Seven Financial Services Trends That Will Determine the Sector's Future

1. A changing environment for competition:

As newer players like fintechs, digital-first providers, and even Big Tech companies like Amazon, Meta, and Google disrupt the market, consumer access to financial services is changing quickly. The establishment of cross-sector collaborations and integrated solutions at the point of sale is exerting increased pressure on established financial services institutions to consistently innovate in order to stay up to date.Customers are more willing than ever to grant FSIs access to more personal data in order to receive digital offerings that are customized to meet their individual needs. 

All things considered, clients are now more willing to share data with their financial services providers, according to a survey conducted by Ernst & Young. 

Interestingly, customers are also more open to sharing personal information about themselves, including sensitive information about their preferences,non- financial information about themselves, information about their online activities, information about their transactions at other financial institutions, and information about their jobs.

2.Buy Now Pay Later(BNPL):

In the formalized Indian economy, Buy Now Pay Later, or BNPL, is a relatively fresh and expanding trend.  "This is an ever-growing payment option that allows users to purchase goods and services today and pay for them later, making it a great way for people to manage their finances in the short term," said Amit Gupta, managing director of SAG Infotech.

In the coming years, more BNPL usage will be anticipated, according to top Ashish Aggarwal, Director, Spacemantra. Conversely, financial losses are anticipated to increase dramatically, and the industry is probably going to lose its unchecked social standing in a number of market sectors. Because of this, rapid growth is seen as a passing fad rather than a long-term paradigm shift.

3.Investment in Real Estate:

As a long-term investment, owning a home is more alluring than ever. According to Suren Goyal, Partner at RPS Group, secondary home purchases surged in 2022 as more individuals realized the benefits of real estate investing. Additionally, the market was vulnerable during this time, and real estate held up well while all other assets faltered. It now seems like a safe and secure investment as a result of this. 

Investors find its fewer risks and higher expected returns to be particularly alluring. He further said that a growth in real estate as an investment option is anticipated in 2023.

4. The importance of Cybersecurity will rise:

For financial institutions, cybersecurity has always been essential. But it's obviously more of a concern now than it was before, as the number of data breaches reported through September 30, 2021, exceeded the total number of events in 2020 by 17%. Organizations are affected in a variety of ways by these cyberattacks. As a matter of fact, 42% of companies claim that digital fraud stifles innovation and stops them from entering new markets. 

Financial institutions suffer the most from cybersecurity breaches. Financial and personally identifiable information (PII) about their customers is highly valuable to hackers, and security lapses could cost the bank a significant amount of money in addition to a significant number of customers. 

5.Apps for payments :

People from earlier generations might recall the feeling of searching through every pocket for extra change to pay for a cab fare. Others might remember opening wallets and searching through the creases to see how much was owed to a delivery man. All you have to do now is find your phone. Payment apps, one of the most popular financial services trends in India, have fundamentally altered the way we make purchases of goods and services. Most people reading this post are probably very familiar with the apps Google Pay, Paytm, PhonePe, and Amazon Pay. It is difficult to picture our lives without them since they have become such an integral part of them. They may open up more fascinating financial opportunities. 

6.Better experiences are what buyers demand:

A younger generation is becoming more affluent and demanding more engaging digital experiences. From online shopping to streaming media, these experiences need to live up to the ease of use and convenience that customers have become accustomed to in their everyday interactions. In fact, over 70% say they would move from their current financial institution to a financial services provider that provides a better digital experience. Organizations need to put a high priority on providing customers with anytime, anywhere access to their financial lives through digital self-service options and mobile-friendly solutions.

7.Financial Engineering:

A few lenders, such as Protium, have embraced engineering finance, a novel approach to lending in which they assess a borrower's creditworthiness using their in-house lending models. A harmonious partnership between technology, data science, analytics, and risk is engineering finance. This aids in determining the needs of the client through data analytics, developing best-in-class risk models, and producing cutting-edge products.

Consequently, CIBIL scores are no longer a requirement for business loans. Rather, lenders now approve customized and reasonably priced loan products using their own credit scoring models, such as cash-flow-based lending.

Conclusion:

Finance executives limit the scope of costs and focus on cost-scale. Follow more targeted growth bets, concentrate fixed costs in fewer business lines, and generate more leverage from denser customer and operating footprints in order to imitate successful efficient-growth companies.