Trends in Digital Financial Innovation
What is Financial Services Innovation?
Digital financial innovation is a broad concept that includes advancements that change the way financial institutions and other financial services can better serve consumers through technological advancements. Generally, a new or emerging technology that comes along and disrupts a traditional way of doing things can be considered digital financial innovation.
In the past some notable examples of significant innovation include ATMs, credit and debit cards, credit scoring, indexed mutual funds and more. Innovation in financial services can come in the form of a device (such as an ATM) or a new approach to an old problem.
ATMs are an example of innovation that has benefitted consumers while simultaneously reducing operating expenses for banks. With cash available 24/7 at the touch of a button, the days of waiting for the bank to open became ancient history. Likewise, credit and debit card usage has eclipsed cash, bringing yet another financial innovation in short time. Now, as mobile payments such as Venmo gain traction, it’s likely the world is undergoing another shift in the way people pay for everyday transactions.
Recent and New Digital Financial Innovation Trends
Digital financial innovations such as PayPal, Venmo and other mobile payment solutions are removing barriers previously erected by traditional financial institutions, giving people the freedom to move their money around at will. In its infancy, eBay required buyers to mail checks or money orders to sellers for purchases, making for transactions that ran into weeks or months. After the advent of Paypal, buyers were able to make instant payments, significantly increasing the disruptive nature of eBay accelerating time from point of sale to delivery.
Peer-to-peer lending is another recent digital financial innovation that takes the lending process out of the hands of traditional banks and lets eager investors directly fund projects they believe in. One example is Kiva, which connects lenders with borrowers — often business startups in developing economies — by allowing for micro loans as small as $25.
How Does Envestnet | Yodlee Lead Digital Financial Innovation?
For the past 18 years, Envestnet | Yodlee has helped lead the digital financial innovation charge by making aggregated data available to developers and financial institutions. New platforms, apps and other innovative services rely on financial data aggregation and the consumer permission that fuels it. Many times when a retail banking consumer connects to financial services from a mobile app or their browser, typically data aggregation is involved in the process. Aggregation is the backbone of financial innovation. Envestnet | Yodlee not only makes this data available, but also provides data analytics and tools such as forward-looking machine learning and Artificial Intelligence.
Our real-time financial data, encompassing retail, wealth and credit, is made available via RESTful APIs so developers, financial institutions and fintech innovators have access to a financial data intelligence platform that can redefine the future of digital financial innovation and insights. Innovation is in Envestnet | Yodlee’s DNA. Our team pioneered financial data aggregation, personal financial wellness solutions and our own open API platform, along with offering bank-level security.
As the digital financial innovation landscape evolves, we’re accelerating our research and development in our Financial Data Intelligence Platform as well as investing in our engineering and data science teams. By maintaining international tech centers and global data centers, we’re delivering world-class solutions that meets the highest standards for security and industry best practices. Additionally, our global platform adheres to standards for open banking, privacy, and regulatory compliance.