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Banking and Financial Services
BFSI is elaborated as Banking, Financial Services and Insurance and popular as an industry term for companies that provide a range of such products/services and is commonly used by IT/ITES/BPO companies and technical/professional services firms to manage data processing, new application/software development, testing and managing day to day business as usual activities.
  1. The IT BFSI Market is estimated to reach USD 231.33 Billion by 2026, at a CAGR of 12.3% during the forecast period
  2. The market size large organization accounts for a larger share of 63.8% of the market in 2018
  3. APAC is forecasted to be the fastest growing market with the highest rate of 13.1% during the forecast period

Deployment Outlook (Revenue, USD Million; 2018-2026)

  1. On-premises
  2. Cloud

Technology Outlook (Revenue, USD Million; 2018-2026)

  1. Cyber security
  2. Artificial Intelligence
  3. Business Intelligence
  4. ERP
  5. HCM
  6. ECM
  7. CRM
  8. Unified Communications

Organization Size Outlook (Revenue, USD Million; 2018-2026)

  1. Large Enterprises
  2. SMEs

Services Outlook (Revenue, USD Million; 2018-2026)

  1. Professional
  2. Managed

Banking has been around since the first currencies were introduced - perhaps even before that, in some form or another. Banking is an industry that handles cash, providing credit, and other financial offerings such as investments, mortgages, locker services to store ornaments and documents etc. It receives money from those who want to save in the form of deposits and it lends money to those who need it.

Banking is one of the significant drivers of the world’s economy which provides the liquidity needed for individuals and businesses to invest for the future. Bank loans and credit mean families don't have to save up before going to start new business or buying a house. To start hiring immediately and build for future demand and expansion, Organizations use loans facility.

Different types of banks:

  • Retail Banks
  • Commercial Banks
  • Investment Banks
  • Agricultural or Co-operative Banks
  • Central Banks
  • Payment Banks

Rising competition both global and local and stringent government regulations are some major factors driving Banks to adopt IT solutions, as they not only help in the day-to-day process but also ensure that enterprises comply with government regulations.

The banking industry is undergoing a fundamental shift, one driven by ever increasing competition from Financial Technology companies, changing business models, escalating regulation and compliance pressures, and disruptive technologies.

The emergence of FinTech/non-bank startups is changing the competitive landscape in financial services, forcing traditional institutions to rethink the way they do business. Regulatory and compliance requirements become more restrictive because the data breaches become prevalent and privacy concerns intensified. Customer demands are evolving as consumers seek round-the-clock personalized service.

  1. Key Challenges in Banking Sector:
    1. Cyber Crime:

      Cybercrime damages all over the world predicted to cost up to $8 trillion annually by 2022, not getting caught in the landslide is a matter of taking in the right information and acting on it quickly. With the threat landscape always changing, understanding how cyber-attacks are evolving and which security controls and types of training work is going to be crucial:

      1. In 2018, 93% of malware observed was polymorphic, meaning it has the ability to constantly change its code to evade detection (2019 Webroot Threat Report)
      2. Overpowering physical theft, which, until 2017, was the most common type of fraud against corporations for a decade (ENISA Threat Landscape Report 2018) has now shifted to Information theft, fraud transactions, or attack is now the prevalent type of crime against organisations.
      3. There were 137.5 million new malware samples in 2018 (AV Test) and we’re already at 24,55 million new samples in 2019 (and it’s only April, 2019)
      4. Over 50% of devices that got infected once were re-infected within the same year (2019 Webroot Threat Report)
      5. The overall cybersecurity market is expected to grow from USD 21.63 billion in 2017 to USD 38.29 billion by 2022. In order to tackle the cyber-attack and keep customers safe, Financial institutions must invest in the latest technology-driven security measures, such as:
      6. Address Verification Service (AVS) - In order to identify suspicious transactions and prevent fraudulent activity, AVS validate the billing address submitted by the card user with the cardholder’s billing address on record at the issuing bank.
      7. End-to-End Encryption (E2EE) - E2EE is a method of securing communication that prevents third-parties from accessing data while it’s transferred from one end system or device to another.
      8. Authentication: Authentication can be done in many ways such as:
        1. Biometric authentication: Common forms of biometric authentication include voice and facial recognition and iris and fingerprint scans. Since Biometric authentication is more secure and difficult to replicate, Banks and credit unions can use it in place of PINs.
        2. Location-based authentication: “is a special procedure to prove an individual’s identity and authenticity on appearance simply by detecting its presence at a distinct location.
    2. Increasing Competition: Financial technology (FinTech) companies are usually start-up companies based on using software to provide financial services. The increasing popularity of FinTech companies is disrupting the way traditional banking has been done. This creates a big challenge for traditional banks because they are not able to adjust quickly to the changes – not just in technology, but also in operations, culture, and other facets of the industry.
    3. Regulatory pressure: Since Regulatory requirements continue to increase, and banks need to spend a large share of their discretionary budget on being compliant, and on building systems and processes to keep up with the escalating requirements.
  2. Emerging Technologies in Banking domain:
    1. ARTIFICIAL INTELLIGENCE (AI)

      AI in Fintech refers to the theory and development of computer systems capable of performing finance-related tasks that usually require human intelligence. It is an application of AI technology enabled for the financial sector in various forms such as designing investment strategies, anomaly detection with pattern recognition, voice recognition, text mining, semantic analysis, and market analysis with data mining.

      The overall AI market is expected to grow from USD 1.34 billion in 2017 to USD 7.31 billion by 2022.

      To offer differentiated and enhanced services to their customers through the computing power of machines, BFSI leaders are likely to invest heavily in AI technologies in near future.

    2. Open API:

      "Open" refers to the capability of companies to expose their services to the outside world, so that external partners or even competitors can use these services to bring added value to their customers. This trend is possible by the technological evolution of open APIs (Application Programming Interfaces), which are the digital ports making this communication possible.

      Together companies, interconnected through open APIs, form a true API ecosystem, offering best-of-breed customer experience, by combining the digital services offered by multiple companies.

      From the banking point of view, the Open Business model enabled by APIs promises much. We’ve found that banks that use Open Banking will profit from a potential 20 percent more revenue.

    3. Cloud Computing:

      Strategically implemented cloud computing services allow banks to utilize resources in a highly flexible, cost effective, reliable and efficient manner with the help of data analytics, data storage, and batch processing techniques. Further, the cloud technology also helps the banking industry to improve returns, operational efficiency and the client servicing department. Some cloud computing applications in banking and finance are Hosting, Payment Gateway, ERP and CRM.

    4. BUSINESS INTELLIGENCE (BI)

      BI helps organizations to make better decisions and forecasting by organizing and analysing historical data. This could be internal data from the organization’s departments or from external sources such as social media channels, marketing data, customer feedback or macroeconomic information. With the help of BI, users can access business data and perform queries to generate insights using this data. It equips business users with easy-to-use data exploration, data preparation, appropriate analytics, and data visualization tools and techniques.

      The overall BI market is expected to grow from USD 3.33 billion in 2017 to USD 4.82 billion by 2022.

  3. Start-ups: are giving stringent competition to big organisations, addressed the challenges in the banking industry and offered their competitive solutions which are adopted by various BFSI organizations. Few good implementations are:
    1. Digitising the user journey and improving customer experience on both web & mobile frontends
    2. Payment Service provider (PSP) neutral and PCIL1 compliant wrapper-layer that enables clients to scale their online payments and enable ALL payment options
    3. Provide Real Time Context Awareness Platform for Smarter Apps Business
    4. Enable financial organizations to answer questions from customers and employees without employing help desks or call centres. Empower bank-grade services that are delivered on-premise or via cloud services, answering questions simultaneously with personalized responses for individual customers

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