A technological revolution is transforming the financial services industry by empowering consumers to connect with each other and institutions, which is creating new opportunities for lower income consumers, asserts a report from The CSC Leading Edge Forum.
According to the report, “Connected Consumer and the Future of Financial Services,” the four technologies transforming financial services are: mobile devices, microfinance, new media and the ability to mine both structured and unstructured data.
Hand-held devices, such as mobile phones, tablets and cards are enabling new payment and financial processes, including insurance claims and mobile money, which is now driving force behind how financial services are being delivered to people who have no bank account, but do have a mobile phone.
“In a highly connected world, consumers across the economic landscape are empowered to not only shape their own fiscal futures but ultimately play powerful roles in revolutionizing financial services,” said Patrick Molineux, chief strategy officer of CSC’s Financial Services Group and lead author of the report. “All organizations need to understand these trends and prepare for the potential disruptions and opportunities coming from connected consumers.”
Microfinance products, including smart cards and mobile phones for insurance, loans and microsavings, allow easier access to financial services for lower income consumers.
By amplifying the voices of consumers, new media are giving low income people more influence over financial services firms; peer-to-peer payments and internet lending enable less mediated transactions.
As a result of these technologies, the amount of data is rapidly increasing, thus creating opportunities for insights that will drive the creation of new products and expansion into new markets.
The adoption of those technologies allows people to connect with each other on a massive scale and provides access to financial services, while removing barriers such as income level and location. They also create opportunities for insights into consumer behavior and sentiment, the report says.
“Technology has fueled the evolution of the financial services sector at such a rapid rate, from mobile visa-payments to insurance for rural farmers, we’re seeing possibilities for lower income consumers that would have been unimaginable just 20 years ago,” Molineux said.
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