Over the previous two decades, technological upheavals have altered how we interact, converse, shop, and conduct business. Consumers’ interactions with their money, what they expect from financial institutions, and how those institutions work have all been challenged by emerging technology in the financial services business.
New technologies are making operations easier, more efficient, reducing errors, improving communication, and changing how people think about and interact with money. Most importantly, these technologies can greatly help financial institutions.
Chatbots and automation, for example, are emerging technologies in the financial services business that cut man-hours, improve client connections, and increase profitability. While the influence of new technology on financial services may vary depending on the function, many of them are expected to be adaptable and beneficial.
Top Five Emerging Trends
If they haven’t already, expect these developing technologies for financial services to become a part of financial institution’s IT stack:
Digital Experience Platforms
Although digital experience platforms are not new, modern technologies allow financial institutions to change an industry that is still relatively new. Hybrid cloud (cloud/server) solutions, for example, provide consumers with both privacy and accessibility. Real-time intelligent data integration, such as real-time digitization, personalization, and advanced analytics, is also possible with hybrid systems.
The emergence of API platforms, which allow users to link their banking data into other apps and vice versa, is one of the most significant of these advances. More financial institutions have battled API, but now that the EU has mandated open API, many organizations in the United States are following suit.
Consumers can benefit from open banking by sharing data with third-party budgeting apps and using money management tools, which allows tiny financial institutions that cannot afford to provide these services to do so through third parties.
How can you take advantage of the situation? Offering your clients a new digital experience platform via an online portal will entice them, provide more value, and give them the ability to do anything they want with their data. Hybrid solutions also improve security while lowering expenses because to automation and real-time data transfer.
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 obvious 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 anything from data entry to risk appraisal to loan form processing, saving major 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.
Why should you employ chatbots and AI? Artificial intelligence can help banks make smarter, faster choices by decreasing man-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.
Digital Payments
Digital payments are quickly becoming the norm in the banking industry. This includes everything from debit and credit cards to digital wallets and mobile payments. Digital payments are helping banks to reduce costs and offer more convenient services to their customers. It is also helping to make financial services more accessible to those who may not have access to traditional banking services.
Digital payments refer to a variety of methods of making payments electronically, such as through debit and credit cards, digital wallets, mobile payments, and more. The trend in digital payments is rising rapidly as customers are increasingly opting for the convenience and security of digital payments over traditional methods. Consumers are being drawn to digital payments due to their ease of use, speed, and security, as well as the fact that they can be used globally. Additionally, digital payments are becoming increasingly popular among businesses, as they can accept payments quickly and securely without having to worry about the fees associated with accepting cash.
Data Analytics
Data analytics is another trend in the financial services industry that is rapidly gaining traction. This technology allows companies to gain insights into customer behavior and preferences, as well as identify opportunities to improve customer engagement and offer more personalized services. Data analytics can also be used to detect potential fraud and money laundering activities, which can help to protect customers and businesses from financial loss.
Data analytics is the process of collecting, analyzing, and interpreting data in order to gain insights into customer behavior, preferences, and trends. The trend in data analytics is rapidly growing as businesses seek to gain a competitive edge by leveraging data to gain insights into customer behavior, identify opportunities to improve customer engagement, and offer personalized services. Additionally, data analytics can be used to detect potential fraud and money laundering activities, which helps to protect businesses and customers from financial loss.
Blockchain
Blockchain is an emerging financial services technology trend 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 on their own (including checking, money processing, trade finance, and so on).
Smaller financial institutions without the resources to design a solution may face major 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. Also see 7 Trends to Accelerate Your Digital Transformation.
Conclusion
Although no new technology is guaranteed, many of them have a lot to offer. If you’re looking for solutions for your financial organization, it’s critical to consider all of your alternatives, implement what works best for you, and keep expanding and growing those possibilities.
In the future, the trend in financial services will continue to move towards digital technologies. This will include the continued growth of open banking, artificial intelligence, blockchain & fintech, digital payments, data analytics and cloud computing. Banks will increasingly leverage these technologies to improve customer service and reduce costs. Additionally, AI will be used to automate more processes, such as loan applications and customer service, while blockchain will be used to further reduce reliance on third-party intermediaries. Finally, data analytics will be used to gain deeper insights into customer behavior, allowing banks to offer more tailored services and better target their marketing efforts.
