How Digital Transformation is Impacting FinTech Industry? Know the Challenges, Benefits and Applications


How Digital Transformation is Impacting FinTech Industry? Know the Challenges, Benefits and Applications 

Fintech is not an exception to the disruption caused by digital transformation in practically every sector. The sector has become more technologically relevant and customer-focused as a result of the advent of digital technology. 

Financial institutions can successfully provide the experiences that their stakeholders and end users demand by offering services digitally. Additionally, they can anticipate an increase in corporate innovation, customer involvement, and employee happiness. Fintechs can also work more quickly and effectively to compete in the market more effectively. 

Let's first comprehend the relationship between digital transformation and the explosive expansion of the fintech industry: 

The term fintech digital transformation primarily describes the introduction of digital tools and technologies in accordance with market trends, development of financial patterns, and evolving customer behaviour with the goal of enabling businesses to profoundly adapt to the constantly changing customer requirements and making financial institutions more effective and customer oriented. 

The pandemic has produced a different picture, even if we are aware that the financial services sector has a traditional viewpoint and takes time to adapt to innovation. It has embraced rapid physical and digital transformation, which has hastened tangible change. The fintech sector must rise to the challenge of providing businesses with potent computing solutions. 

Cloud-based platforms, big data analytics tools, the creation of fintech mobile apps, the redesign of organisational and business processes, and collaboration with digital transformation consultants to create scalable financial models are some examples of the new tools and technology. 

The following statistics highlight the quick adoption of financial digital transformation: 

  • Statista predicts that by the end of 2022, 65.3% of the population in the US will be using digital banking, up from 61% in 2018. 

  • Only 14% of banks that are at least halfway through their digital transformation projects, according to Forbes, have implemented machine learning tools to yet. 

  • At a CAGR of 23%, the market for digital transformation is anticipated to grow to $3.3 trillion by 2025. 

The following are the main developments in digital transformation affecting the fintech sector: 

  1. Personalized Experience Through Chatbots: 

Providing quick and safe digital payment options requires a tailored experience. Consumers prefer to utilise apps that provide them with a great experience by including all important features and functioning seamlessly. Chatbots with AI capabilities are important for providing a customised experience. 

These chatbots may operate around-the-clock without human assistance and provide clients with all the information they require promptly. Advanced chatbots can communicate with people in a way that feels human, solve their problems, and receive feedback. Fintech businesses can collect the data and use AI technology to evaluate it so they can better serve their clients. 

Chatbots can be used by banks, financial institutions, and even insurance firms to provide their clients with improved services and assistance. 

  1. Transformation through Blockchain: 

Blockchain is a ground-breaking technology that underpins cryptocurrencies, as is well known. However, due to its strength as a technology, blockchain can significantly revolutionise financial businesses' core operations. This is the rationale behind the massive $552 million investment in this technology by financial sector companies. The potential for blockchain and related technologies to develop and have an impact on financial services is enormous. 

Blockchain technology can provide stringent controls to audit data and smart contracts through a centralised, secure ledger system. By enhancing openness and lowering the likelihood of human error, it also boosts user or customer trust. As a result, blockchain technology is used by numerous financial organisations, including microfinance firms and even stock exchanges. 

1.Enhanced Team Collaboration: 

Collaboration is improved as a result of digital transformation in the financial industry. Having a strong internal team is one of the essential needs for any organisation to succeed. A more effective and well-coordinated team and internal operations will ultimately result in more significant business growth. This can be achieved by implementing digitally advanced tools and technologies that can optimize and automate work processes. 

2. Disruptive technologies as a vehicle for innovation: 

Consider ApplePay, Google Pay, and PayPal. These are all illustrations of cutting-edge digital payment methods. These eWallets or mobile wallet apps have quickly gained ground amidst the client fundamental shift from conventional, time-consuming banking procedures to convenient digital services. The popularity of these ground-breaking products has prompted several financial businesses to develop such approachable solutions for online transactions. 


We can be sure that open banking will revolutionise the fintech industry in the next years as a revolutionary idea. Innovative finance solutions can also be released to the market using other disruptive technologies, such as IoT. 

Increased Efficiency in Operations: 

Digital lending platforms can facilitate more effective business operations and streamlined business outcomes by collaborating with leading providers of digital transformation services and integrating digital tools and technologies like AI (Artificial Intelligence), data analytics, IoT (Internet of Things), Open Banking, automation, and real-time reporting. 

The KYC is among the best illustrations of digital change. The Know Your Customer (KYC) procedure is now more practical and precise thanks to digitization. Financial firms can effectively analyse credit with the aid of video-based or social security-based personal identity, leading to better decision-making and preventing fraudulent transactions based on consumer behaviour and online transaction analysis. 

Ending Note 

In a nutshell, the fintech industry is significantly impacted by digital transformation. Digitalization must eventually become a strategic cornerstone for every firm if they want to stay competitive and provide superior service to their customers. 


Implementing digital transformation projects is a wise choice if ease, sustainability, scalability and security are your main concerns. Through the creation of fintech apps, banks and other financial institutions all over the world have begun to take use of the advantages of digital transformation and automation. It is appropriate to point out that traditional fintech firms must adopt new business models in order to alter their operations and keep up with the times.