Fuelling the future of finance with data streamsBy Darren Watkins
Traditional institutions need to utilise constant, real-time data flow that generates insights on the fly.
Financial institutions in Southeast Asia (SEA) are hurtling towards a digital future, whether they are ready or not. The region’s fintech sector saw US$4.3 billion flowing in from Q1 to Q3 2022, making up 7% of global investments in the same period, with payments continuing to attract the most funding. Propelled by both customer demand for more seamless cross-border transactions and an increase in government-issued digital bank licences, digital payments have been further entrenched in the region. With such massive growth potential comes the inevitable challenge of staying ahead of competition.
The solution, as is often the case in modern marketplaces, is data. The majority of, if not all, financial institutions rely on massive amounts of data to power their business models. But for many traditional players, their legacy IT infrastructures struggle to keep pace with agile fintechs that leverage modern data platforms and architectures.
To accelerate, traditional institutions need to utilise constant, real-time data flow that generates insights on the fly. The benefits are enormous, from creating more personalised customer experiences, to accurate market forecasts and preventing fraud. Unleashing the power of data streaming will play a significant role in allowing financial institutions to better utilise resources, bolster efficiency and tighten margins that will boost profitability.
Modernising legacy systems for streamlined finance processes
Over half of senior leaders noted that retaining skilled employees is one of the biggest internal barriers. Leveraging technology to bolster the integration of multiple systems or migrating legacy infrastructure is imperative to enhancing how resources are used.
But financial institutions don’t have to go into this journey alone. Engaging providers that offer fully managed cloud-native platforms can help set data in motion, equipping organisations with real-time market insights while freeing up resources for more strategic tasks.
For example, banks can make use of a complete cloud-native infrastructure to support real-time ledgers. A centralised overview and technology stack gives banks greater insights when it comes to launching new services, modifying pricing strategies and allocating fresh investments. Platform automation and virtually elastic scalability helps organisations reduce operational complexities, adhere to high standards of data governance and meet regulatory compliance. Financial institutions must be empowered with data-driven decisions to remain at the forefront of the industry amidst evolving market conditions.
Effectively monitoring and mitigating fraudulent behaviour
The uptake of digital finance, greater regulatory oversight and growing impact of incidents on end-users has also translated to increasing cybersecurity concerns and how measures can be enhanced. For instance, amendments to Singapore’s Personal Data Protection Act (PDPA) in 2022 increased the financial penalty cap on companies under breach, emphasising more accountability by companies towards customer data.
Financial institutions must build well-equipped technological infrastructure that helps navigate growing risks and enable real-time fraud detection. Regardless of digital payment method, adopting event-driven architecture and decoupling data capture will enable organisations to analyse large volumes of data instantaneously. Akin to finding the needle in a haystack, even cybersecurity threats with the tiniest anomaly can be detected. Especially for BFSIs with extensive portfolios or fintech superapps, enabling real-time data communication across different business lines can trigger early warning systems. Affected business units can react swiftly to mitigate potential damage, preventing harm to consumers, the organisation’s bottom line and reputation.
Setting data in motion to offer next-generation customer experiences
Real-time data streaming should also be leveraged to empower next-generation customer experiences. Yet, 39% of financial institutions in APAC are still in the incremental stage of technology transformation. Meeting changing customer demand is the primary objective for this shift, and the competition is fierce. Particularly for financial firms with digital-only products, delivering hyper-personalised experiences are essential to build customer loyalty despite the lack of face-to-face interactions.
For example, banks can consider adopting decoupled architecture, where data lakes are transformed to become distributed datasets that work independently but remain interoperable to provide a central nervous system that can be tapped into. Scaling and modernising can be simplified as a ‘plug and play’ situation where compatible building blocks are used to extend data architecture to reduce disruption, boost operational efficiency. In the age of instant gratification, the processing of real-time user information and transactions translates to high customer satisfaction. More importantly, this creates a financial ecosystem where customer experiences such as loan disbursements, digital verification or credit scoring are made seamless and in real time.
With a comprehensive snapshot of user activity at the tip of their fingers, the possibilities of adding to existing revenue streams are endless. Financial institutions have the information needed to personalise recommendations at unique touchpoints, upsell services or rollout new features to better engage customers. New offerings such as providing a one-stop platform for multiple financial services, or expanding cross-industry partnerships with sectors like telecommunications can also be explored.
The epoch at present calls for financial institutions to plug the operational gaps between back-end processes and front-end customer experiences. By tapping into the power of data in motion to gain more timely and relevant insights, players in the industry are able to create an innovation-focused space.
Whether it is to ensure more secure transactions, bolster operational efficiency or provide greater customer experiences, financial institutions who properly leverage their data reap numerous benefits. Surmounting present challenges is only phase one, but leveraging real-time data will spur growth for the next phase of digital finance.