5 Tech Trends Which Are Shaking Up the Financial Sector
Financial Organizations are under more stress than ever before to become digital across all processes and lines of business to improve customer experience. Here are five technology trends that we believe will reshape the banking sector.
The financial services industry is becoming more competitive by the day. As a result, banks and credit unions are methodically looking for methods to differentiate themselves to add value to customers while still meeting their financial goals. This is where digital transformation comes in. Financial Organizations are under more stress than ever before to become digital across all processes and lines of business to improve customer experience. Here are five technology trends that we believe will reshape the banking sector.
Let's start with a definition of the five technologies that are transforming the industry:
1. Automation of robotic processes (RPA)
Most organizations already have RPA in place thanks to workflow tools and process automation. RPA will grow even more popular as a result of the significant inflows into index-tracking, passive funds, and ETFs, as well as the ensuing cost pressure. Firms may automate and streamline exception handling by using RPA to process these funds, save money, and free up resources.
2. Machine learning
Operators guide the "robot" (which is just a computer) to execute repetitive tasks, where machine learning begins. Since the robot becomes more familiar with the procedure, it no longer requires the operator's assistance and can perform the duties on its own.
3. Artificial Intelligence and Chatbots
Chatbots and other artificial intelligence solutions are becoming an increasingly important aspect of the banking industry's digital transformation. They are widely used by financial institutions of all sizes, with everyone from giant banks to small credit unions using them. While chatbots are the most apparent form of artificial intelligence, AI also impacts back-office operations, product delivery, risk management, marketing, and security. Simple algorithms are used by machines to handle data entry to risk appraisal, to loan form processing, saving significant banks hundreds of thousands of employee hours. Smaller banks can take advantage of these growing technologies in the financial services business, including solutions to automate certain operations, including documentation, data exchange, data analysis, customer communication, and more.
The biggest problem here is ensuring consistent quality in external procedures like chatbots, where some organizations frequently fall short. Many firms also face challenges such as siloed data sets, regulatory compliance concerns, and the worry that AI will fail to do the job. So many companies combine AI solutions with manual regulation and management to avoid machine error. This indicates that adopting new technologies in financial services may be delayed due to financial organizations' concerns.
Security, risk mitigation, and cyber-security are all areas where AI is becoming increasingly important. Because it is hard to eradicate cyber-security threats and other dangers, AI is utilized for real-time analytics and monitoring, generating fast notifications when something is detected as a threat. This enables quicker reactions, lowering the risk of actual breaches. While some argue that new AI initiatives may increase security threats in companies that aren't aware of them, long-term applications, adequate setup and onboarding, and quality control may mitigate these concerns.
Artificial intelligence can help banks make smarter, faster choices by decreasing person-hours and time investment. Simple chatbot solutions will allow you to provide clients with increased customer security and response times. It also relieves pressure on first-line customer service because many clients may get responses from a chatbot rather than a live person. Backend automation in risk management, security, document processing, and other areas has numerous advantages, but it is still a relatively new technology in the financial services business.
4. Blockchain technology
Blockchain is one of the best emerging financial services technology trends that is revolutionizing the financial world as we know it, yet adoption is currently modest. Blockchain is the technology that underpins Bitcoin and has been adopted by major financial institutions such as JP Morgan Chase. It is widely recognized as one of the most promising areas for banks and other financial institutions today. Investment banks, for example, could save $10 billion if they moved their clearing and settlement operations to the blockchain, according to Accenture.
While blockchain is one of the most exciting new technologies in the financial services business, it is still not widely available. While other organizations are working on broader solutions, most banks are implementing blockchain solutions independently (including checking, money processing, trade finance, and so on). Smaller financial institutions without the resources to design a solution may face significant challenges. With blockchain's rapid acceptance over the last few years, it will swiftly become a mainstream solution for payments, fraud reduction, loan processing, smart contracts, and other applications.
5. Digital distribution and digital channels
Once a transaction has been done and validated, the position, accounting, and related calculations might all be accomplished in minutes using a digital methodology. The data would subsequently be available in real-time to anyone interested via web portals, mobile devices, and other means. They'd also be able to interact with the data more efficiently, thanks to data mining.
What effect does technology have on financial services?
Progressive financial services firms are looking for innovative technology that can increase efficiency and speed of service while also improving customer satisfaction. Companies are leveraging the digitalization of banking technology to alter the financial services industry through customer experience management due to exponential growth in information technology.
Because of competition from consumer brands like Amazon, Facebook, and Google, the financial services industry seeks to improve online customer service. Most financial services executives believe that improving the client experience is the most important driver of banking digitization.
Financial service providers have reaped significant benefits from technological advancements that make their processes more efficient and help them avoid security risks. Every business strives to deliver timely solutions to its clients to increase customer satisfaction. Still, this progress will continue in the future, and the systems will evolve to provide a better client experience. However, one thing that should not be neglected is the need to have a backup plan in place. Companies have experienced circumstances when their systems have crashed, resulting in profound implications. The advantages mentioned above are just a few of the numerous benefits that technology has brought to the banking sector.