For a long time, the new technology market entrants found it difficult to break into the financial services industry. Well, not anymore! The financial services technology trends are transforming the financial firms like never before. These trends without a doubt are pushing today’s financial sectors to let go of traditional financial practices and embrace agile and creative approaches to stay ahead of the competition. Financial institutions today are using new tech in many ways, be it to improve customer experience, streamline their own processes, or to expand services.
The market opportunity for financial services technology trends today is massive with an upward rising growth curve. As per a recent report, the value of the global fintech market which was at $127.66 billion in 2018, is expected to reach $309.98 billion by 2022.
Now, without further ado, let’s deep-dive into the 7 most significant financial services technology trends that are currently taking over the financial industry landscape by storm.
These financial services technology trends for sure will help you:
- Deal with both existing and new issues that your enterprise is facing or may face,
- Implement security,
- Improve accessibility,
- Deliver convenience, and
- Most importantly, build trust.
Top 7 financial services technology trends
1. Artificial intelligence (AI)
Several financial services firms today rely on AI to cut costs, save time, and add value. For instance, wealth management organizations today use robo-advisors to analyze and understand
- client investment,
- spending, and
- general behavior regarding money management
This not only makes your job easy but will also help you customize the advice offered to customers.
In other words, with its high-computing and cognitive abilities, AI today is helping financial businesses manage risks, detect frauds, and identify data patterns that enable them to make decisions with minimal human intervention. Besides this, it is also helping consumers customize financial products and services, perform budget analysis, obtain saving advice, and realize the best of digital payment and mobile banking experiences.
In addition, AI-powered chatbots are helping the financial services industry a great deal by delivering timely responses to customers. Thereby, allowing employees to use this time to focus on more important job tasks.
Also, Gartner predicts that AI-backed Chatbots will handle approximately 85% of the total business-customer interactions by the end of 2020.
2. Blockchain Technology
Blockchain, without a doubt, is going to be the future of the sharing economy. Most of the financial firms, today, are adopting blockchain technology to improve their efficiency, cost-effectiveness, and security throughout the entire spectrum of financial services.
To elaborate, blockchain technology scrutinizes transactions in a cost-effective, decentralized, and verified manner. It reduces dependency and supports proper book-keeping. Blockchain is one of the financial services technology trends that supports the industry’s two most important pillars, namely – transparency and trust.
In other words, blockchain technology which runs cryptocurrencies continues to power innovation in the financial services sector. It offers an opportunity to speed up and simplify cross-border payments, ensure greater trade accuracy, improve online identity management, and ensure all financial operations are secure and transparent.
3. Robotic Process Automation
The sole purpose of automation is to serve three key requirements:
- Speed, and
A recent report suggests that robotic process automation (RPA) can help financial businesses save costs up to 25-30% approximately.
Automation helps financial services providers automate tasks that are repetitive, mundane, and data-intensive. That being said, most of the financial organizations today have automated some of their business operations. As a result, they are experiencing improved process accuracy and task evaluation, reduced manual dependency and latency, and increased productivity across finance verticals – all why creating the best possible user experience for customers.
4. Safe Payment Solution
Technology is sure to have changed consumer and business expectations when it comes to payments. Today, instant payment options are available in many markets despite the lack of immediate payment infrastructures.
Embracing instant payments platforms will help you achieve the transaction speed your consumers expect of their banking experience – thereby enhancing customer satisfaction and experience.
To add on, with instant payments, more transactions will be made digitally instead of in cash. As a result, payments will become a less expensive and more user-friendly affair. Finally, by expanding and combining instant capabilities with solutions in e- and m-commerce banks, and credit unions could give room to the emergence of a plethora of new services.
5. Data Mapping and Analytics
Data plays a vital role in the banking and financial services business. And this raw data when mapped with technologies such as data analytics is sure to deliver immense business value.
In other words, data analytics enables you to successfully process enterprise-wide data and gain actionable business insights that can help you in decision-making, product development, risk management, fraud detection, and much more.
Not just that it also helps you revisit past performances, optimize ongoing tasks, processes, and functions, as well as, equip you to prepare for the future.
To add on, IBM found that 71% of finance organizations that used analytics said that it gave them a competitive advantage. That is, data analytics enables you to gain insights into your customers’ behaviors which you can use to enhance your branch experience, tailor products and services to suit your customers’ needs, and much more.
Undoubtedly, in the near future more and more financial institutions are expected to harness data analytics to capture, control, and regulate data to build efficient and smarter enterprises – thereby, opening a new arena of opportunities.
6. Cloud Computing
Initially, innovations in the cloud computing domain weren’t received that well by the financial services industry out of anticipation of security issues. Fortunately, not anymore!
With mobile banking on the rise, insurance and other transactions being done online, and increased use of digital wallets pervading the finance industry landscape – cloud computing technology is a life savior!
Today’s digital-backed sharing economy never sleeps. And customers today use their smart devices to communicate and transact 24*7. Thanks to cloud computing – it makes 24/7 customer service possible from anywhere.
In addition, cloud computing enhances the agility of financial institutions and makes scaling up services easier and quicker. And since you only pay for services you use, cloud computing can help control costs to a great extent.
7. Security Solution
Without a doubt, financial services industries are the primary and favorite targets of hackers. The reason being, financial businesses deal with personal and financial data of customers, which is sensitive. And unfortunately, this is the data that is the most vulnerable asset in a connected ecosystem.
And, the following factors make these threats even more dangerous and easy for a bank firm to get hacked.
- Use of third-party vendors
- Rapidly evolving, sophisticated, and complex technologies
- Cross-border data exchanges
- Increased use of mobile technologies by customers, including the rapid growth of the Internet of Things
- Heightened cross-border information security threats
Therefore, the nature and incidence of cyber risk are unique and change without notice. As a result, typical approaches to risk management may not be good enough. Fortunately, today – advanced analytics, real-time monitoring, AI, and other tools are helping financial firms to detect potential threats and stop them before they strike.
That being said, financial institutions must do more than just invest in technical measures to protect against cyberattacks. They must share best practices with each other, work with governments to ensure cybersecurity is prioritized, educate employees about their cybersecurity responsibilities and also reach out to the public to help them understand their role in keeping their personal data safe.
This is just the Beginning…
The emerging technologies in the financial services industry have impacted almost all the business aspects. That being said, traditional bank practices are slowly deteriorating, processes are becoming more transparent, transactions are layered with security and precision, and customers are offered a great deal of personalization across products and services. This is definitely good news!
The financial services industry trends mentioned above are just a beginning. Many more are yet to flourish! These trends are sure to take finance firms to a different level. Because today, you are dealing with evolved consumers whose needs have changed and have become highly sophisticated. And nothing less than an advanced approach would suffice to meet their expectations.
Please feel free to add more trends in the below comment section if we have missed out any!