Wednesday, 10 February 2016

Role of technology in alternative finance - Part 1

Mainstream banks are known for their medieval IT standards. The situation is slowly getting better but many institutions are still struggling to advance from systems from the last decade. They are stuck with legacy mainframes that are very difficult to move on from.

On the other hand, new firms involved in alternative finance are moving at very fast speeds in terms of technological innovation. New and elegant systems are taking over manual intervention and speeding things up for the whole industry. What kind of role does technology have to play in this sector?

Data: Technological advancements have helped various firms handle data like never before. Firms can now handle huge volumes of data with ease thanks to new and improved systems that have been set up. This has helped the firms becomes fasted and more aggressive in the industry helping push it to new levels

Automation: With highly effective technology, a lot of work that was done manually has now started being done automatically. These systems have set algorithms which ensure maximum accuracy while doing tasks. Not only do these systems reduce manual labour but also ensure that the possibility of errors is minimal

Efficiency: Technology in general has helped increase the efficiency of the industry on the whole. With accurate and effective systems in place to take care of a lot of tasks, the output that a firm can have has increased by many times. This amount of output not only generates higher revenue but also helps the firm cut a lot of costs.

Alternative Finance is often presented as the enemy of mainstream banking institutions. Though it is correct to say that Alternative Finance initially emerged to fill gaps left in the industry by the then leading banking institutions, alternative finance now serves more than just those that the banks cannot help. Instead of working as competitors, banks and alternative finance providers are now collaborating to resolve all the gaps left in the system. While alternative finance is leading the way for technological innovating, a lot of advancements are trickling down into the mainstream banking world.


This is the first part of the series with detailed overview to be covered in following parts

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