This is the right time for financial service providers to employ a different business model for them to remain relevant in this era of digitalization. It is high time for them to shift from the static but highly profitable model that they have been using for some time now. Various innovations in the financial industry such as robo-advisers, crowdfunding, mobile payments, peer-to-peer lenders, and bitcoin have all risen up and they seem to be interrupting the long serving business models in the banking industry. The service providers can no longer ignore the technological wave and have no choice other than to embrace IT solutions for financial services that have an impact on the performance of their in fundamental ways. The IT solutions operate in such a way that proves beyond doubt that it is time for financial service provider to embrace them.
- The IT Solutions Deploy Highly Focused Services and Products
IT solutions for financial services provider are now targeting their services and products where old business models have frustrated the customer. The focus has also been directed towards areas of high profitability for the financial service provider. One of the areas where customers have really suffered is when transferring money to the international destination. For the longest time, money transactions were taking more than 3 days. By using IT solutions in money transfer, some companies have risen up and managed to transfer the money faster, at a lower rate and more easily.
- Social Media as a Strategy for Gathering Crucial Data
Information is the foundation for decision making and especially in the finance industry. The IT that is responsible for running social media provides valuable information to financial institutions about their customers. Financial institutions can take advantage of social media and IT to create communities associated to the products created by the financial service provider. The service providers use the information provided to reach out to potential customers and that way, they can guarantee the success of their future.
- Enable Commoditizing and Automating High-margin Processes
One of the benefits of IT is cutting costs through provision of cost effective alternatives. Innovators are now employing IT in a way that opens up certain financial services for a larger number of people. Services such as automated investment advice, tax minimization strategies an asset allocation can all be automated and offered at a lower cost than what it costs to provide the services on an interpersonal level.
- Collaborations with Incumbent
Although new inventions should do away with the old strategies, it is not the case for IT solutions in the finance industry. IT solution allows new entrants in the industry to use strategies which allow them to compete with the incumbent on some areas. In areas where they are sure they cannot compete with the incumbent, the finance service providers collaborate with the incumbent by using their scale and infrastructure. The incumbents are open to collaborations with the new entrants as a way of gaining a better understanding of the strategies that they are employing. A good example is the collaboration between ApplePay and MasterCard and Visa.