The rise of smartphones has ignited a change in behaviour of consumers. The online culture in today’s world along with the proliferation of services and apps that feed it – people can not only access information and data they have never previously been able to, they can do it with ease and convenience.
Whether it’s checking your online account or setting up an online investment portfolio, people now expect to handle financial affairs as easily and conveniently as they do their email or Facebook page.
The technological revolution has forever changed the way companies do business. The traditional model of a new business turning directly to its local high street bank and/or conventional investors are no longer the only game in town.
Technology in the financial segment presents both peril and opportunity for banks. Some institutions will inevitable be tripped up by their own complacency and fail to make the digital transition. However, those that make the leap could benefit significantly.
The entire financial service industry has been founded on arguably antiquated systems and steeped in compliance and regulation, this segment is expected to undergo a disruption in 2019, especially with respect to the digital transformation. Big changes can be predicted with respected to the banking sector. One main factor which is driving the disruption in these segments are the number of options consumers have when it comes to banking, even the most established financial institutions will be required to work to stay relevant to stay ahead. A few of the notable trends to look out for are:
- Cloud to become ubiquitous: The previous year have witnessed an evident shift with regard to how cloud technology is perceived by financial institutions. The global spending in this sector grew at an unprecedented pace in 2018. The hybrid could technology combines characteristics of private and public clouds, this provides flexibility of the cloud and continued access to data in on-premises systems. This trend will provide to be an attractive opportunity for firms interested to increase their cloud technology footprint while keeping factors such as costs and risks involved in this migration at bay.
- The growth of distributed ledger technology and blockchain: Financial institutions initially tried to circumvent this technology, however in the coming years they are expected to succumb to this technology. There are multiple ways where the integration and application of this technology can benefit banks. Blockchains decentralized system and distributed ledger enables transactions to be encrypted, provides relevant parties with access to shared ledgers to verify the transactions, without compromising the identity of those involved. All the verified transactions are added as a permanent block and becomes an irrevocable part of the shared ledger. This ensures that transactions takes place faster while providing a higher level of security, improved quality of data all at a reduced cost.
- The global increase in regulators: The global increase in regulators change will help focus on improving the accuracy of data reporting while creating transparency for consumers in credit scoring and advancement in other automated decision making. Consumer compliance, and specifically the fair and responsible treatment of consumers, will continue to remain as top priority.
- Application on Artificial Intelligence (AI) and Machine learning (ML): Artificial Intelligence and ML have a huge undeniable potential regarding how they can change the financial markets. They can find simple applications in improving internal process leading to better client servicing. The growing focus on KYC will likely prove how AI and ML will be helpful in firms identifying high-risk customer and transaction from questionable jurisdiction that would otherwise not be visible to the human eye. AI is currently being used to decrease friction by improving workflows and decision process. These concepts are expected in leveraging lending and credit risk management, and the other is fraud prevention. AI systems can used to track and flag potential threats, making all transactions more secure. AI and ML will provide better customer experience, better risk management and tracking across services, reduced costs with better efficiency and lower time to market.
- Voice technology in banking: The future of banking is about engaging with consumers in the digital ways. Voice-activated baking is predicted to be a big part of this, as consumers are used to using voice assistants at home, at work, in cars and on mobile devices. This technology is experiencing rapid development and advancement with respect to emergence of conversational engagement (increase in level of engagement), personalized digital concierge, improved security with respect to voice recognition, and the emergence of Voice banking 2.0.
- Phygital Advances: The internet of things (IoT) has expanded rapidly over the last few years and has the potential to create a huge, positive impact on the financial and banking segment. The recent fusion of physical and digital experiences, known as “Phygital” experience is becoming prominent and is expected to continue to grow. A number of financial institutions are introducing “Phygital” driven kiosks and booths as contact-points for customers, this not only enhances transactions but also introduces and promotes self-service. This “Phygital” trend is expected to grow vastly in the near future.
Overall the future of banking and financial institutions are going to undergo a magnitude of revolutions and changes in the coming year, this can mainly be attributed to the growth of fintech. The global fintech industry is rapidly growing and is drive by a powerful blend of innovative start-ups and major technology players. If banks leverage this potential correctly they will be able to achieve a value creating collaboration. The fintech industry has a huge potential to create a desired change to teleport finances into a tech-savvy industry.
Technology in the financial segment presents both peril and opportunity for banks. Some institutions will inevitably be tripped up by their own complacency and fail to make the digital transition. However, those that make the leap could benefit significantly. The entire financial service industry has been founded on arguably antiquated systems and steeped in compliance and regulation, this segment is expected to undergo a disruption in 2019, especially with respect to the digital transformation.