It is already known that financial services are among the most heavily regulated industries in the world. 2020 will witness more focus on compliance in terms of how firms are collecting and using customers' data.
Fremont, CA: Financial services industry is witnessing radical transformation since the past few years. Whether it’s insurance, banking, wealth and asset management, or Fintech, the industry is scrambling to meet the evolving needs and expectations of customers, comply with complicated regulation as well as drive innovation within the organization.
Here, we are discussing the key challenges facing the financial services industry:
Increasing Complicated Regulatory Environment
It is already known that financial services are among the most heavily regulated industries in the world. 2020 will witness more focus on compliance in terms of how firms are collecting and using customers' data. The uncertainty around Brexit also indicates that financial services organizations need to be prepared for different types of scenarios- the impact on capital requirements, short term market volatility, and adjustment on pricing strategies.
Trust in the traditional banking model is declining. Regulatory policy, including open banking initiatives, has enabled challenger organizations to enter the market, driving the evolution of customer choice. These organizations generally charge customers low fee, provide more efficient products, and faster services through their customer-friendly digital interfaces. The main benefit for these challenger organizations is that legacy systems do not restrict them, so they can be flexible to respond more quickly to changing customer needs.
Cybersecurity and protection of customer data have been considered as a top challenge for financial institutions over the last five years. The evident increase in cyber attacks within the industry can cause unrepairable damage to the business and the brand. Besides this, card payment scams are still a big threat for financial services firms trying to prevent fraud.