Financial institutions function through a complex web of operations. Technology has long been used to streamline these better and alleviate the burden on human resources. This evolution can be traced from the first computers in bank branches to the adoption of cutting-edge cloud-based software solutions.
While initially, financial institutions turned to SaaS solutions primarily for assistance with non-essential workloads. We are now also seeing an increased uptake of SaaS solutions for core functions. From core banking systems to customer relationship management, today, they have access to a range of Software-as-a-Service solutions because several benefits can be derived from its adoption:
Scalability
SaaS solutions are highly scalable, which allows financial institutions and fintechs to adjust capacities according to demand. For example, using SaaS solutions designed to conduct underwriting for lending can be scaled up around the festive season when there is a higher demand for financing among users. Users of such SaaS products can upgrade or downgrade their subscriptions, unlock new features, and manage their operations more flexibly.
Accessibility
Since SaaS solutions are cloud-based, users can access them anywhere as long as they have an internet connection. Even professionals using this software can access data anywhere, easing logistical issues. Data accessible through SaaS platforms tends to be real-time, which improves operational efficiency and promotes collaboration.
Also Read: How can you build a living, thriving community around your SaaS product?
Analytics and insights
SaaS solutions analyse data in real-time and, combined with machine learning capabilities, identify patterns and develop insights based on this data. Machine learning has enabled faster trading decisions through algorithmic trading, fraud detection and prevention by flagging anomalies in large data sets, robo advisory to identify investment opportunities with the highest returns, and loan underwriting by scanning consumer data to make decisions.
The evolving role of SaaS and its relevance in financial institutions
Undeniably, SaaS in financial services has gone from being a good-to-have to a must-have. While capabilities such as scalability and accessibility have made it essential for financial institutions, the evolving landscape of financial services now calls for increased value addition from SaaS solutions.
Artificial Intelligence
Artificial intelligence made long strides in 2023. This trend will cause a seismic shift in how financial institutions operate. Where SaaS tools once assisted financial institutions in workflows, the advancements in AI have opened up automation possibilities for administrative workflows, data collection and processing, generating insights, and reporting them.
Moreover, using large language models (LLMs), as a natural progression from machine learning, is becoming more commonplace now. These models are capable of understanding and generating even human language text.
Its applications include navigation of consumers’ financial decisions while limiting the need for a human in the loop – which could potentially improve user interfaces of customer-facing personal finance management applications by adding the critically missing human context.
Cost-effectiveness
Generative AI will streamline labour-intensive functions such as pulling data from various sources. Financial information trained on LLMs could help customer service agents generate answers to practically any query a user might have about their finances or create loan profiles for potential credit seekers by analysing data from several sources. This would eliminate the costly resources required in procuring and processing data.
Also Read: 7 lessons from building a 7-figure SaaS business with just 1 engineer
SaaS will usher in innovation and agility in financial services
Banking and investment services worldwide were expected to spend US$651.1 billion on IT services in 2023, and spending on software was expected to increase by 13.5 per cent. This is no surprise, as evidence of its efficiency can be seen across analytics, accessibility, and business imperatives like cost-effectiveness and scalability. And SaaS solutions are only being constantly upgraded to enhance productivity and efficiency in delivering financial services.
The use of generative AI will further boost these interests and many others. It can enable superior forecasting thanks to its capability to write queries and formulas for Excel and SQL. It could also be used to improve reporting exercises by automatically creating graphs, charts, and text.
SaaS is evolving to ease compliance obligations through more efficient screening and better prediction of questionable transactions that could stem fraud, phishing and money laundering at a larger scale than ever seemed possible.
—
Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic
Join our e27 Telegram group, FB community, or like the e27 Facebook page
Image credit: Canva
The post SaaS revolutionises finance: From streamlining to AI integration appeared first on e27.