Technology has always been an enabler in the financial world right from the era of traditional calculators. The financial industry has witnessed several path-breaking innovations in technology that has empowered companies to carry out faster transactions, reduce errors, transparent payments and more personalised services.
Below are five technology trends that will dictate the financial industry:
1. Internet of Things
IoT is set to disrupt the financial sector, and according to IDC (International Data Corporation) Financial Insights, a market intelligence service provider, retail banks will spend over USD 16 billion on digital transformation technology. So what exactly is IoT? And how will it affect the lives of consumers? Internet or otherwise ÔÇ£InternetworkingÔÇØ of things is basically networking of different physical smart devices such as your smartphones, computers, and electronic appliances at home viz. television, washing machines. In simple words, all things electronic that you own will interact with each other (and with external entities) to offer you more intelligent services and experience. How will this impact businesses? According to Gartner, Inc. (a technology research and advisory corporation), there will be nearly 20.8 billion devices on the Internet of things by 2020. And with such explosion of data and information, businesses can offer more personalised services at the right time to its customers.
2. Augmented & Virtual Reality
In 2016, the world went gaga over Pok├®mon Go, with people jay-walking on the streets. Today, tech-savvy millennials consist of the majority of consumers and staff. And according to the Millennial Disruption Index, 73% of surveyed millennials expect offerings and services from Google, PayPal or Apple rather than from their banks. In fact, 33% of them say they wonÔÇÖt even need a bank in the future! With such a fervour towards technologies and video games, they find it difficult to relate to conventional brick-and-mortar banking activities. Financial companies are investing heavily in R&D to leverage Augmented Reality and are coming up with technologies that offer immersive experience through visualization. For e.g. Citibank have been experimenting with Microsoft Hololens as a virtual workstation that combines 2D and 3D to complement some of the bankÔÇÖs trading operations. These workstations have colourful bubble-maps and holistic patterns of the market empowering its traders. Cool huh?!
3. Artificial Intelligence & Machine Learning
What if your financial planner Bob, is a Robot, who gives you extremely accurate advises within seconds on your next investment? Sounds unbelievable? Well, brace yourself since Artificial Intelligence (AI) & Machine Learning could have a breakthrough influence in automation and personalization in customer service. AI tools are also expected to reduce errors, fraud and crime along with increase in speed of operations. In the next ten years, Robo-bankers are all set to take-over humans and automated banking could replace over 30% of employees in the financial sector!
Both Bitcoin (cryptocurrency) and Blockchain (technology behind Bitcoin) have become a disruptive force in the financial world. While the former is still elusive and a concept that has not been widely accepted, the latter has gained foothold as a technology that can transform the financial industry positively. So what is a blockchain? According to Financial Times, ÔÇ£A blockchain is a shared digital ledger that allows transactions to be recorded and verified electronically over a network of computers without a central ledger. Cryptography is used to protect the data from fraud or hackers.ÔÇØ So whatÔÇÖs all the hype about you ask? Well, if implemented smartly, there are numerous benefits of blockchain including, decentralisation, reliability, simplification, transparency, traceability, cost saving, reduced errors, faster transactions and improved data quality! And thereÔÇÖs more! Blockchain technology will simplify complex and cumbersome processes in the financial industry especially in Asset Management, Insurance Claims Processing, and Supply Chain Trade Finance etc., to name a few. It is also said to reduce bottlenecks in the International Payments sector and will enable banks and money transfer houses to provide real-time payments whilst reducing operational costs, human error and fraud thereby alleviating money laundering.
5. Mobile Payments & more
A new generation of mobile applications are making money transfers faster, less expensive, and reduce the hassle of visiting the ATM. According to Business Insider, the opportunity is huge and is worth more that USD 1 trillion. In fact, in Australia, Apple Pay, Android Pay and Samsung Pay have invested in technology that can store credit card information in their mobile phones. In fact companies are also exploring to extend this technology in wearables (watch, jackets) etc. The major game changes in mobile payments are inApp Social Payments (through Facebook etc.), Virtual Currencies, Peer to Peer Innovations and Mobile banking solutions.
With such innovations, be ready to receive a personalised car loan from your bank, the minute you walk in to a car showroom, tap your mobile phone on the store POS, make payments through the sensors on your jacket, and send money that will reach your loved ones through your mobile in just minutes! ItÔÇÖs a consumerÔÇÖs world after all!
This article was originally published on ├ëclat Q4 2016 edition. (https://www.uaeexchange.com/corporate-news-magazine/1352-eclat-corporate-news-magazine-quarter-4-2016)