7 Major Changes in America’s Financial Landscape in 2021

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Since the pandemic, countless things have changed in the financial industry all over the globe. Especially the US financial industry has made some major changes. There has been a massive surge in the financial technology industry in the last couple of years. FinTechs startups have raised over $26 billion from venture capital funds in the first half of 2018, compare that number with $3.8 billion in 2013 and you can witness the growth of the industry.
The global pandemic helped in changing major themes in the financial industry. FinTechs all over the country helped in shaping some major pain points. It can even enhance the importance of online experience, customer experience, the need for social impact, how to authenticate the digital identity of online customers (pervasive data breaches and fraud threats), and how to exploit the promise of emerging technologies. Here are the biggest changes in the financial industry that happened in the last couple of years.

Major Changes in America’s Financial Landscape:

KYC compliance
KYC compliance

Digital Identity is Important:

As more and more people conduct financial transactions online after the Covid-19 pandemic, the risk of fraud, money laundering, and identity theft is also increasing. In old age, identity fraud involved an individual stealing a person’s identity data and using it to open new accounts, apply for credit cards, loans, and mortgages.
In the Digital Identity & Biometrics session, there seemed to be a growing trend known as “identity as a service” and how much thought needs to be given to how digital identity information is capture and shared across organizations to detect and prevent fraud and distinguish between fraudsters and legit customers.
To understand how crucial the identity verification space has become in the financial industry, the sheer number of financial service providers should be enough. There are thousands of ID Verification solution providers available in the industry today.

Biometrics Verification is Mainstream:

This year, biometrics verification became an industry norm for verifying customer identities. One way for businesses to maintain brilliant customer-business relationships is to integrate biometrics verification in the customer onboarding process. It is becoming clear to customers and businesses that the financial industry is moving forward with biometrics verification to ensure a secure and frictionless customer onboarding experience.

Building Frictionless Processes:

Banks are closing branches faster and faster over the last decade as they have less profitable regions and fewer customers for routine transactions. The number of branches in the U.S shrank by more than 1,700 in one year in June 2017.
Given the fact that all the banks are losing branches, they’ll have to fill this gap by making the online channels as intuitive and as possible. With increasing competition in the digital space from FinTechs offering financial services, banks need to start building frictionless customer onboarding processes.
KYC compliance
KYC compliance
Banks need to invest in technologies such as online document verification, online bank account verification, online proof of address verification, online KYC compliance software, and so on to survive in the digital space.
Industry experts are suggesting building a series of invisible apps, with a single aim of reducing the amount of effort required by customers to open new accounts and access other financial services.

Bank Issued Cryptocurrency:

With the rise of cryptocurrency, the industry has become a hub for money laundering activities. Government and regulatory bodies have worried about the challenges available in the crypto industry. With the release of the 6th Anti-Money Laundering Directive, the cryptocurrency industry will have to follow some regulations.
Needless to say, the switch to cryptocurrencies is inevitable, governments are going to work to launch their cryptocurrencies to keep providing customers with what they want while having a handle on money laundering activities.
Could cryptocurrency mean the end of cash-based currency? , but cryptocurrency substituting traditional currency will only be possible in very specific use cases.

Augmented Intelligence:

Another major change that will be see implemented in the financial industry in upcoming years will be artificial intelligence. With the right combination of AI-powered technology and human touch, banks can enhance the customer verification process. It can also use to supercharge the customer-business relationship.
Augmented intelligence works the best whenever two primary conditions are met:
  • Large sets of structure data are available to test and reter
  • Trained experts are available to train and correct the technology.
KYC compliance
KYC compliance
The combined effort of AI and human efforts can use to identify anomalies in the transactions, customer screening, and verification.

Social Impact:

Another major change that will happen in a financial institution is the impact of social media. Up until this point, millennials and Generation Z are more conscious than prior generations and banks can use this to their benefit.

Open Banking:

Open banking is without a doubt one of the most discussed topics in the current financial industry. No surprise, since the release of the second iteration of Europe’s Payment Services Directive (PSD2). The concept of “open banking” is that a consumer can let service providers access data held by that consumer’s bank. Open Banking is the way of sharing data between banks and service providers with user consent.
Many banks and financial institutions are ready to invest in an open banking model to enhance the banking model.

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