Digital Payments and Big Data: Situation and Evolution

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digital payments

The digital transformation is revolutionizing the way companies operate, address changes, and leverage opportunities in the digital context.

This revolution is driven by increasing globalization and the introduction of new technologies. In the banking sector, these technologies are also related to Digital Payments.

This digitization process has a significant impact on the banking sector, requiring banks to adapt quickly to changes and be prepared for a new and different approach to process management to remain competitive.

But what is the current situation regarding the digitization process in banks, and what are the new solutions that can be adopted for better management of digital payments?

Let’s explore this in this article where we provide an overview of the Italian situation.

The Impact of Digitalization in the Banking Sector

Digitalization has made the banking sector extremely competitive. Banks must meet the growing demands of customers by providing high-quality customer experience services to ensure their survival, while also being able to guarantee data security and effectively manage big data, fully harnessing its potential.

Automation, cloud computing, mobility, and digitization are all key elements of digitalization that lead to increased operational efficiency, improved functionality, smoother customer interactions, and a reduction in costs.

In addition to these technologies, RegTech is another solution that enables banks and financial institutions to ensure compliance with the ever-increasing regulations through constant monitoring of transactions.

Another crucial aspect of digitalization is dematerialization, which applies to both customer relations, through the digitization of contracts, internal processes, and ICT support tools, as well as the banks themselves. According to PwC’s study – “Changing to Survive”, physical branches will still be used, but primarily as local contact points or for specific operational activities, as many transactions will be conducted directly online.

This represents a new concept of a branch characterized by operational flexibility and a focus on customer experiences, leading to a substantial reduction in costs and increased efficiency, with various benefits for customers as well.

Digital Payments  in Italy: The Data

According to data gathered in an article published in La Stampa in Italy, Digital Payments are gaining more ground, with an increase in the use of credit cards, bank transfers, and ATMs. Credit card transactions exceeded 100 billion euros in 2022, indicating a trend towards digital payments.

Certifying the acceleration of payment digitization in Italy is also the recent study “Donare 3.0” conducted by PayPal and Rete del Dono, commissioned to Bva Doxa, with the aim of analyzing the donation landscape in Italy. In fact, a steadily growing trend is the use of mobile devices for making donations.

Simultaneously, we are witnessing a series of specific interventions and measures by the regulator and market players to facilitate the transition to digital tools and the adoption of remote channels.

The Importance of Big Data in the Banking Sector

The abundance of data generated by daily activities offers a unique opportunity in the banking sector. These data can be divided into two main categories:

  • Structured data, such as databases or phone directories, which make up about 20% of the available data;
  • Unstructured data, such as texts, documents, and images, represent 80% of the data.

Big Data can be leveraged through advanced analytics and cutting-edge technologies, such as artificial intelligence and machine learning, in at least three key areas of intervention:

  • Personalization and convenience: Banks can expedite credit risk assessments in loan applications thanks to big data. Furthermore, with the wealth of information available, customer services can be customized across all company channels.
  • Security: Banks are supported in detecting potential fraud and monitoring suspicious transactions. This enhances investment security and customer account privacy.
  • Creation of relevant offers: Banks can anticipate customers’ financial objectives and develop proposals that align with them.

It’s worth noting that 90% of the currently available data has been created in the last two years. This growing amount of data has brought new challenges but also new and significant opportunities, emphasizing the importance of effectively managing Big Data.

The advantages of using Big Data in the banking sector can be substantial, but how should they be utilized while respecting regulations?

In the realm of Digital Payments, RegTech solutions offer this possibility because they enable the identification of potential financial crimes and risky behaviors through advanced data analysis.

Today, RegTech solutions are indeed leveraged in the banking and financial sectors to:

  • Improve regulatory compliance.
  • Monitor risk.
  • Detect financial crimes.
  • Reduce operating costs.

This approach allows organizations to thoroughly understand and efficiently govern compliance processes, particularly anti-money laundering (AML) analysis and risk management.

RegTech and Digital Payments: a new frontier in the banking sector

The banking sector is increasingly investing in RegTech, a fusion of regulation and technology, driven by regulatory demands aimed at effectively managing the regulatory burden through the use of new technologies.

Revelis, for this purpose, offers RegTech solutions like Moneying, an application suite based on the Rialto™ platform, which utilizes advanced analysis to detect potential financial crimes and risky behaviors.

In conclusion, digitization, the use of Big Data, data security, and RegTech are redefining the banking sector.

Banks must adapt quickly to remain competitive and fully leverage the opportunities offered by digital transformation, and the adoption of AI and RegTech solutions is essential to maximize efficiency and ensure regulatory compliance.

As Revelis CEO Salvatore Iiritano states, “Thanks to RegTech solutions, companies can derive significant benefits, especially in terms of process efficiency.”

The future of digital payments is here, and the banking sector must be ready to embrace it by adapting swiftly.