FUTURE OF DIGITAL FINANCE       

The digital revolution opens endless possibilities – Sanjeewaka Kulathunga

The digital revolution has transformed the financial services industry in recent decades; and it is paving the way for a more efficient, accessible and customer-centric financial ecosystem.

It began with the digitalisation of basic banking services. This led to the widespread adoption of online and mobile banking, which enables customers to manage their finances conveniently from anywhere.

And the emergence of fintech startups marked a wave of innovation in financial services, offering what traditional banks couldn’t match. Leveraging technologies such as AI, machine learning and blockchain, these startups introduced services such as peer-to-peer lending, robo advisory services and cryptocurrency trading.

Companies such as Square and Stripe revolutionised payment processing; they made it simpler for small businesses and indi­viduals to accept payments while platforms such as Robinhood democratised investing by eliminating commissions and fees.

The impact of the digital revolution has democratised access to financial services and promoted financial inclusion for previously underserved populations. And the use of artificial intelligence and data analytics has enabled personalised financial advice that’s tailored to individual needs and goals.

And the volume of global digital payments surpassed US$ 5.4 trillion in 2020, indicating a significant shift towards digital financial transactions with expectations that it will exceed 11.3 trillion dollars by 2026.

The future of digital finance will be influenced by techno­logical advancements (notably AI and machine learning), and drive personalisation, predictive analysis and risk management. Blockchain technology offers secure and decentralised transactions that have the potential to transform the financial landscape.

Biometric identity verification will bolster transaction security. ‘Open banking’ encourages innovation and enables third party developers to create financial applications. The digital revolution has reshaped finance by emphasising technology driven solutions, and fostering a dynamic, inclusive and customer-centric environment.

Convergence of finance and technology will persist, promising accessibility to financial services for all, irrespective of their location or economic status.

One of the most significant impacts of the digital revolution has been the democratisation of access to financial services. Previously, traditional banking services were often limited to those with access to physical branches, leaving many people – particularly in rural or underserved areas – without adequate access to financial services.

However, the advent of online and mobile banking is enabling individuals to access a wide range of financial services from the comfort of their homes or mobile devices. This increased accessibility has also opened up new opportunities for financial inclusion and economic empowerment.

In addition to improving access to traditional banking services, the digital revolution has also given rise to a new wave of fintech startups that are leveraging technology to offer innovative financial products and services.

One area where fintech startups have made giant strides is in the realm of payments and transactions. Companies such as Square and Stripe have revolutionised payment processing, and made it easier and more affordable for small businesses and individuals to accept payments online.

Similarly, the rise of digital currencies such as Bitcoin and Ethereum has led to new possibilities for international money transfers and cross border transactions, which bypass the traditional banking system.

However, perhaps the most transformative aspect of the digital revolution in finance has been the rise of artificial intelligence and machine learning. From personalised investment advice to automated fraud detec­tion, AI and machine learning are revolutionising how financial services are delivered and consumed.

The future of digital finance looks increasingly bright as technology continues to evolve. We can expect to see even more innovative financial products and services, which are tailored to meet the needs of an increasingly digital and interconnected world.

From decentralised finance platforms built on blockchain technology to biometric authentication systems that enhance the security of digital transactions, the possibilities are endless.

The digital revolution has introduced profound changes to the financial services industry, and opened up opportunities for innovation, inclusion and economic empowerment.

Indeed, the intersection of finance and technology will continue to shape the way we interact with money and financial services, by creating a more accessible, efficient and inclusive financial ecosystem for everyone.