Many analysts feel that the finance industry has a complex relationship with technology. Financial markets are fast paced. Important decisions have to be made within seconds, otherwise, there could be a missed opportunity. To deal with these challenges, financial institutions need to evolve as technology improves. Lawrence Chu, The Managing Director at Moelis & Company, advises companies to become more dynamic in order to avoid falling behind their competitors.
Many of the recent technological advancements have created new chances for organizations to succeed. Financial institutions are changing their dynamics from physical to digital engagement. “Technology has become pervasive in all industries, in particular, finance. At one point, technology was considered its own industry, but over the last ten years its become omnipresent in every sector,” said Chu.
New revenue streams are being created and there is ongoing development of new security and compliance systems. With that being said, here is a look at some other trends to keep an eye on over the next few years as the finance industry merges with some of the recent technological advancements.
Improved Open Banking
Many analysts think of open banking acceleration as a way of allowing back end systems to deal with front ends through the help of APIs. The trends will continue to grow in popularity due to the creation of multiple new fintech companies. Open banking acceleration may stop new entrants in Europe and Asia from making an impact on the market.
Artificial Intelligence could expand past robotics process automation and head into areas like fraud management. The pervasive AI will require data scientists to create new models that can integrate into the public cloud.
Blockchain Goes Universal
Blockchain cases in the financial industry will move past inter-banking applications. Blockchains that are managed by banks may eventually create a self-sovereign identity model.
Recent technology has helped change consumer expectations in regards to payments. New instant payment options are emerging in several markets. In some countries, banks are offering apps to their customers or collaborating with other banks to create a new P2P payment experience. Instant payment platforms allow banks to complete transactions faster, which enhances the customer’s experience. More transactions will be handled digitally, which makes them cheaper and more user-friendly. More banks will have the opportunity to diversify their portfolios.
Financial organizations will invest in upgraded cybersecurity. There will be an increased emphasis on wide end to end patching, biometrics, and a larger implementation of cybersecurity architecture. Traditional passwords will become obsolete.
As a result of the last economic recession, the finance industry has become more regulated. New amendments such as the Sarbanes-Oxley Act help ensure that financial institutions are protecting consumers. Audits can put a strain on regulators, as they have to sort through data to find answers to problems as they arise. Regulators are using analytics to help process information in a timely manner. Data analytics allow regulators to stay proactive when it comes to making sure that financial institutions are compliant. Analytics can help predict compliance issues before they cause trouble.
Multicloud adoption will continue to rise in popularity. There will be a large migration to the cloud. Investors will be drawn to security and cloud management due to its flexibility and agility. This trend could lead to movement across the public and private sector.
Improved quantum computing will help analysts make accurate predictions in areas such as public health and meteorology. There will be investments in quantum resistant cryptography and new quantum-based algorithms. Cloud adoption will also benefit from this trend.
More banks are starting to overhaul their branches to help improve productivity and user engagement. Banks will also focus on improving their network connectivity and transitioning from desktop computers to tablets and mobile apps.
Changing The IT Workforce
More financial institutions will focus on upgrading the IT workforce. Companies may have to re-train their hardware engineers. New policies promoting corporate digital responsibility will cause powerful corporations to look at the social impact that their transformation choices may have on their employees.
Information level security will cause cybersecurity to evolve. There will be increased user privacy by dividing personal and business zones.