Top Technologies Shaping the Future of Finance

It’s no secret that the financial services industry has seen drastic technology-led changes over the past few years, and their IT departments are under significant pressure to improve efficiency, facilitate innovation whilst somehow costs and support legacy systems.

With customers expecting seamless experiences, better services, value for money and regulators demanding more and adopting new technologies to collect and analyse information; the pace of disruption shows no sign of slowing.

So, what are the top technologies shaping the future of financial services?

Machine Learning (ML) and Artificial Intelligence (AI)

Financial services are already embracing AI and ML in a variety of applications across the financial system; from assessing credit quality, to price and market insurance contracts, to automated interaction with consumers. As highlighted in a recent article by Anthony Jenkins, Executive Chairman at 10x Banking; in an industry like finance, which is driven almost entirely by data, ML and AI could allow companies to analyse massive amounts of information, spot patterns and make accurate predictions that are beyond capability.

Robotics and AI are already targeting a specific combination of capabilities such as: social and emotional intelligence, natural language processing, logical reasoning, identification of patterns and self-supervised learning, physical sensors, mobility, navigation to name a few.

The analysis of consumers’ habits, activities, behavioural characteristics and financial data products can be customised to meet and anticipate their ever-evolving needs to develop meaningful consumer relationships and lead to truly innovative products.

Blockchain

Within the context of financial services, Blockchain is commonly associated with cryptocurrencies such as Bitcoin. Blockchain essentially allows for safe and secure trading of almost anything – from money, ideas, copyrights, or royalty fees – while also eliminating the middle man formerly needed to facilitate or manage the transaction. It can be used to manage anything of value, done virtually, with limited security risk.

As highlighted by Tina Singh, CDO at Mahindra Finance, more than 70 of the world’s largest financial institutions have joined a consortium led by a company called R3, to spearhead research and development of Blockchain database usage in the financial system. And, according to a report by the World Economic Forum, 10% of the world’s GDP will be on Blockchain by 2027.

Also mentioned in Tina’s article; most cases in the financial sector are more towards the replacement of centralised systems by Blockchain, which defeats the original purpose of the technology - democratisation of information and who holds it.

The Cloud

A significant player in the future financial service sector will be the provisioning of services in the Cloud. For such a regulated industry, cloud services can help financial institutions advance their IT innovation whilst protecting them from cyber-attacks, ransom-ware as well as adhering to compliance.

Deutsche Bank have announced a ‘cloud-first strategy’ over the past few years, with ambitious aims to migrate 80-90% of applications to the cloud by 2020. In the words of Jean-Pierre le Treut, cloud is the “agent for digital transformation in the financial services market”; as digital transformation is only made possible through cloud.

The rise of cloud adoption in financial institutions could be accredited to the following trends. Firstly, new regulations such as data protection legislations like GDPR, has the potential to fundamentally change the payments value chain. These are enforced in response to growing security concerns as services are migrated to digital environments. However, this leaves them open to more vulnerabilities on the network and threats from cyber criminals.

Secondly, banks are facing increasing competition from fin-tech companies in the industry which were born in the cloud era, unable to invest in their own private infrastructure so were forced to develop apps in the public cloud, providing them with a significant advantage over traditional financial services.

The future will belong to those financial institutions which embrace and recognise the technologies which will come to play a significant role. Expertise will be defined by data security, cloud and cloud service. Those CEOs that believe they run a financial service company should move over and open the doors to the next generation of CEO who appreciate that the future is not business centric, but technology centric.

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