Technology Trends in the Banking Industry
With the speed of technology increasing at what seems to be an exponential pace, it continues to bring exciting innovations and opportunities. In the financial industry the implementation, adoption and vision for new technologies continues to evolve. These latest trends point to different applications, offering opportunities to increase customer satisfaction, improve security, flexibility and scalability, and reduce costs.
Here are some of the latest technology trends in the banking and financial industry this year:
“Our intelligence is what makes us human, and AI is an extension of that quality.” – Yann LeCun
Financial institutions continue to look to AI in a number of different areas. Examples of AI applications can be seen across operations, trading, wealth management, management, sales & marketing, compliance and beyond. Accenture points out the power of AI to enable financial institutions to grow customers trusts through “contextul, holistic advice that is truly in the customers best interest”. It’s a priority application that institutions should already be actively working on. The technology is there and customers may bypass banks altogether to get the experience.
One of the continued challenges with AI is talent. While, 55% of survey participants identified an AI leader within their company, more than half of those appointed their head of innovation in this leadership role. While this assignment may be fine in the short-term, recruitment of AI experts should grow as a priority as the industry applications quickly get more complex.
“Cloud is about how you do computing, not where you do computing.” – Paul Maritz
Accenture predicts that by 2020, more computing power will be in the public cloud than in the totality of private data centres. The quality and availability of cloud security services now matches the robustness of platforms available, easing banks concerns around security. Rather than testing the waters, it is predicted to see more significant migrations of resources in the financial industry. The flexibility, scalability and agility will be the reward over maintaining on current legacy systems.
“Open Banking will bring added value to two distinct areas: enabling people to make the most of their money and empowering people to grow their money over time.” – Victor Trokoudes
Open banking allows anonymized personal information to go through an application programming interface (API), enabling financial services providers to develop personalized solutions. Solutions include a variety of apps and services. Services range from providing control and understanding of monthly spending, providing guidance on improving credit scores, to getting automatic rebates for shopping at specific stores based on your banking statements. Driven by the Revised Payment Service Directive (PSD2) regulations in Europe, in US, the move towards open banking is driven more by customer demand for an improved customer experience. Open Banking will also impact the traditionally vertical banking value chain, which has started to see fragmentation in prior years.
These value added services may lead to an increased amount of switching and a revised sense of loyalty. Accenture identifies open banking as the differentiator between good trading and banking partners and those “harvesting diminishing profits from old business models”. Open banking should be embraced as an opportunity, rather than a threat.
“Blockchain is really exciting technology because it’s actually providing both transparency but also agility in a contractual relationship that any organization should have.” – Jean-Philippe Courtois
In a survey done by Accenture, 60% of executives believe that blockchain is going to play a key role in the success of financial companies in the near future. With analysts forecasting savings of up to $20 billion by 2022 in the world banking sector through the implementation of blockchain, it would be hard to not agree.
There are increasing tests of the Distributed Ledger Technology (DLT) as well as significant investment in projects and start-ups building feasible blockchain-based solutions in the financial sector. Applications of DLT are wide ranging and include improved client identification networks and a more stable system of insuring deposits and loans. It is also being considered to improve bank to bank and international transfers and exchange, potentially leading to a replacement of the SWIFT system.
While the continuing evolution of and the upside potential with these trends is exciting, it can be challenging to determine the right roadmap and strategy. Financial institutions also need to develop the technology, products and services to support these approaches. Across the growing list of technology trends to follow, developing strategic partnerships with and investing in those developing unique solutions, continues to be a differentiating complement to in-house expertise. Which trends are you most excited about? Share your thoughts by getting in touch at firstname.lastname@example.org.