The 7 Biggest Technology Trends To Disrupt Banking & Financial Services In 2020
Although banking and financial services tend to be slower to adopt new technologies, aPricewaterhouseCooper study confirms the majority of financial services decision-makers are investing in artificial intelligence (AI)—52 percent of executives confirmed they are making “substantial” investments in AI while 72 percent believe it will be a business advantage. One thing that will likely make the rest believe in artificial intelligence’s potential for the industry are the cost savings that are expected to be$447 billion by 2023.
So, how do financial institutions use artificial intelligence? The most visible way the banking industry uses artificial intelligence (AI) is for customer service from chatbots and robots. Many of the largest financial institutions, such as Bank of America and JPMorgan Chase, use AI to streamline customer service. Another customer-facing way AI is deployed is to facilitate mobile banking that allows 24/7 access for consumers to conduct banking operations. AI is also instrumental in the way financial institutions enhance security and prevent and detect fraud. The technology helps financial institutions with risk management and lending decisions and is foundational in making other technology such as big data analytics, robotic process automation, and voice interfaces work.
Blockchain technology, first used in the cryptocurrency Bitcoin, is a distributed database that can keep track of transactions in a verifiable and permanent way. TheHarvard Business Review predicts that blockchain will disrupt banks the way the internet disrupted media. Blockchains are transparent, highly secure, and are relatively cheap to operate. As more financial institutions realize how blockchain can improve security, save money, and improve customer satisfaction, more will adopt the technology.
Blockchain can support banking in several ways. Bitcoin showed how it can be used for payments, but it can also be transformative in the way our capital markets work by tokenizing traditional bonds, stocks, and other assets and putting them on public blockchains. Blockchains would remove the gatekeepers and third parties in the loans and credit system while also making it more secure to borrow money and lowering interest rates. Blockchain could also eliminate manual data reconciliation for bank ledgers. The way information and money are exchanged today will be altered by smart contracts that operate from blockchain technology.
One of the ways to determine a technology’s influence on an industry is to look at how an industry is investing in it. The banking sector is currently one of the top investors by industry in big data and business analytics solutions according to the IDC Semiannual Big Data and Analytics Spending Guide. The amount of data generated by the financial industry—credit card transactions, ATM withdrawals, credit scores—is mind-boggling. And being able to put that data to use to make business decisions and process it effectively to glean actionable insights will be critical to staying competitive in the future.
Financial institutions can use big data to learn more about customers and be able to make business decisions in real-time including learning about a customer’s spending habits, sales management such as segmenting customers to optimize marketing as well as product cross-selling, fraud management, risk assessment, and reporting, and customer feedback analysis. Not only does big data analysis help identify market trends, but it also helps financial institutions streamline internal processes and reduce risk.
Since robotic process automation can save labor, operational costs, and minimize errors,many financial institutions are starting to leverage this technology to create the best possible user experience for customers and to remain competitive. In RPA, software is programmed to enable robots and virtual assistants to complete repetitive and labor-intensive tasks correctly and quickly without human intervention.
