New Technologies and Innovations in the Financial Services Sector
The financial services sector includes thousands of depository institutions (like banks, building societies or mortgage banks and companies); providers of investment products (like mutual funds); credit and financing organizations; and firms engaged in the provision of critical financial utilities (like payment systems and securities processing). It also covers non-depository companies that provide financial intermediation, such as stock market brokers, private equity funds, venture capital providers, hedge fund managers and insurance firms.
Most people have some idea of what insurance is, and many have a policy for their home, auto or life that provides protection against unforeseen events. But there are more sophisticated financial products, like structured finance, that develop intricate derivatives for high net worth individuals and institutions to meet specific investment objectives. There are even specialized services, such as debt resolution or asset management for corporate pensions and trusts.
As the industry continues to evolve, new players and technologies are disrupting traditional business models and creating opportunities for entrepreneurs. Some of these innovations have the potential to make financial services more customer-oriented, enabling them to anticipate major life events and provide products and services that match those needs. For example, a bank can use customer engagement data to identify key “moments” in a person’s life – marriage or retirement, for instance – and then offer relevant products at those times. In addition, digital gig workers and technology are making it easier for people to perform some financial services remotely, such as paying for a car wash or getting a money transfer.