The Future of the BFSI Industry: List of Important Factors & Domains in 2024

The BFSI (Banking, Financial Services, and Insurance) industry is all geared up for a radical transformation. Today, we’re witnessing pioneering trends in banking and finance – from omnichannel banking to AI and Blockchain-powered financial services – that focus on revolutionizing BFSI processes by placing customers at the heart of their present and future strategies. 

‘Digital’ – The future of the BFSI industry

Speaking of the BFSI revolution, two core components are driving the digital movement – digitization and digitalization. According to Simon Paris, CEO of Finastra, “Digitizing means converting into digital format anything which is currently manual or paper-based. Whereas digitalizing is a whole new way of thinking.”

These revolutionary processes enable banks to explore and experiment with disruptive technologies and business processes such as AI, Blockchain, Robotic Process Automation, and Cyber Security to design best-in-class BFSI services. Although digitalization promises robust security and cost-efficiency, its true potential lies in delivering “value” to customers. Ian Bradbury, CTO of Financial Services at Fujitsu, sums it up quite accurately: 

“Digital banking makes life easier for consumers. People are increasingly enjoying the simplicity of managing all their finances in one place, setting up automatic payments or making deposits anytime and anywhere, without the need to queue in a bank.”

One of the most crucial tools of digitalization is Fintech or ‘Financial Technology.’ With the latest tech trends at their disposal, Fintech firms across the globe are changing the traditional norms of the BFSI sector by looking at the challenges and pain points of customers from a fresh perspective. India, too, is no exception to this emerging trend.

Presently, India’s Fintech sector is being rapidly fuelled by the ever-changing dynamic of consumer behavior and needs. With over 330 million internet users and 240 million smartphones, India is on the road to becoming one of the world’s biggest digital economies.

Read more: How an MBA in Digital Finance and Banking (DFB) can be helpful in the BFSI Sector?

Drivers of the transformation of the BFSI industry

Here are five factors that are rapidly transforming the Indian BFSI industry:

1. Payments Banks-Fintech partnerships

Conceptualized by the RBI, Payments Banks (PB) aims to digitize India’s cash-based economy and foster financial inclusion. PBs are ready to bring about a long-term economic impact in India by partnering with Fintech companies and investing in Fintech. By eliminating intermediaries from the value chain, PBs are lowering transaction costs significantly.

Furthermore, PBs are immune to the problems usually faced by traditional banks while adopting the latest technologies. Thus, they are highly likely to adapt quickly to the changing market and consumer trends. Thanks to their immense agility, PBs can tap into a much more extensive segment of the value chain, looping in customers whose needs the traditional banks failed to meet. 

2. AI and Cognitive Analytics

Machine Learning and Cognitive Analytics are the new age tools facilitating information discovery and data-driven decision making across all sectors of the industry. These technologies place data at the center – they process and analyze the data to extract meaningful insights from large, complex datasets. AI technologies seek to “bridge the gap between the intent of Big Data and the reality of actionable decision-making.” 

Since the BFSI sector is a data goldmine, it is the perfect ground for Cognitive Analytics. Cognitive systems can generate valuable insights from unstructured data (company data, industry reports, financial news, etc.) using a mix of Predictive Analytics, Machine Learning, and Deep Learning. BFSI companies can use these insights to create personalized services for customers and promote customer-brand engagement. 

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3. Blockchain

Despite being an emerging technology, Blockchain is already creating ripples of change in the BFSI sector. According to the global bank Santander, by 2022, Blockchain-based systems will be in a position to help banks save US$ 15-20 billion yearly. 

The Reserve Bank of India believes that Blockchain tech holds tremendous potential for disrupting the banking and financial markets. Major players in the Indian BFSI sector, such as Axis Bank and ICICI, have shown keen inclination in experimenting with Blockchain tech. For instance, as a part of its ‘Thought Factory’ initiative, Axis Bank is exploring Blockchain use cases in collaboration with startups.

Since reciprocity is pivotal for successful Blockchain implementations, banks are not only encouraging collaboration between themselves but also partnering with Fintech startups specializing in Blockchain and DLT.

4. Robotic Process Automation

RPA technology is designed to imitate actions based on simple rule-based processes that are performed by humans. RPA systems can interact at the user interface level of an application to successfully emulate the exact steps in the same manner, as anyone working across multiple applications would. RPA is highly scalable, cost-effective, and easy to implement. So far, RPA has been conducive to the growth of the BFSI sector. Here are three points to back this claim:

• RPA has helped improve case handling productivity of global investment banks to address the dilemma of case backlogs.
• For insurance & annuity firms, RPA has enhanced customer experience by “indexing” turnarounds with digital interaction and reducing inbound calls.
• RPA helps to reduce manual errors, thereby improving the quality of financial services. 

5. Cyber Security

Anything, when digitalized, becomes vulnerable to cyber threats and risks. The same goes for the BFSI sector. While cyber threats can emerge from anywhere, anytime, the scariest part about cyber risks is their ever-changing and evolving nature.

As banks and financial services companies are trying to tap into India’s huge smartphone user market, today, almost all banks have their unique digital wallet offering a wide range of services and functionalities. Convenient as they are, digital wallets are quite prone to phishing attacks, intrusion attacks, fake KYCs, and wrongful app manipulation by authorized users.

To combat these multifaceted cyber threats, RBI has directed all banks to issue EMV chip-based cards. EMV chip cards help secure payment transactions via three-step authentication – card authentication, cardholder verification, and transaction authorization. However, there’s still much to be done in the Cyber Security domain. 

How to stimulate the growth of the BFSI sector in India?

So far, we’ve talked about the five domains that hold big promises for the Indian BFSI industry, but how do we channel these into the mainstream, real-world scenario?

Although emerging technologies are propelling digitalization and digitization of the BFSI sector, real change will only come when these technological tools are welded by skilled and qualified experts who know the nitty-gritty of the trade. The BFSI sector now needs professionals who have advanced degrees and know how to work with disruptive technologies like AI, Ml, and Blockchain. 

O.P. Jindal Global University (JGU), powered by upGrad has created an MBA program in Digital Finance and Banking. With this 2-year MBA program, upGrad aims to groom aspiring Indian youngsters into knowledgeable individuals who can make it big in business, banking, finance, and insurance sectors. 

Read: Urgent Need For The Talent in The BFSI Industry

Wrapping up

The comprehensive course covers topics that are relevant to the present BFSI industry, including Artificial Intelligence in Business, Data Visualization in Finance, Blockchain and Cryptocurrency, Fintech Ecosystems Management, Digital Fraud & Risk Analytics, Financial Management & Valuation, and Design Thinking & Leadership for Business. The best part – you will be trained by the expert faculty of the Jindal Global Business School and the Jindal School of Banking & Finance! 

On course completion, MBA graduates acquire all the essential skills required to survive in this changing and competitive industry. They are excellent team players, managers, leaders, speakers, and marketers. This is why MBAs specializing a Digital Finance & Banking are urgently needed in the BFSI sector. With their extensive domain knowledge and niche skills, they can mobilize the new-age technologies to aid the transformation of the BFSI sector.

So, how about building a promising career in banking and financial services with an MBA in Digital Finance and Banking?