How Tech is Impacting Finance and Banking?>
The financial services sector is changing at a rapid pace due to technology. Customers are in the driving seat demanding new technologies and digital practices and this means companies must keep up with the evolving landscape to stay competitive.
Some sectors, such as retail, have already seen widespread disruption by technology – and now the financial service sector is set for the same level of transformation. The technological disruption of this industry will be swift and will revolutionise the sector as we know it.
Key technologies to impact financial services include blockchain and Artificial Intelligence (AI). AI has already improved the healthcare sector. It is being used to detect diseases more accurately, such as cancer, and is also being applied to oversee heart disease, which means these life-threatening conditions can be detected at earlier, more treatable, stages. According to a report from the World Economic Forum, AI will become central to the fabric of institutions and will completely transform the financial-service landscape and will have more impact on business than the mobile revolution.
A report from The Financial Brand says the deployment of AI is forecast to save the banking industry alone more than $1 trillion by 2030. The technology is particularly suited for a range of processes such as managing assets and assessing risks, and many financial institutions are implementing AI systems to process large volumes of historical records and quantitative data. The application of machine learning, natural language processing and robotics will also improve financial crime detection.
The last decade has seen alternative finance platforms emerge and begin to define the sector we now know as fintech. Technology had reduced the costly manual processing of low-ticket credit applications which means credit products can be provided to a sector previously starved of capital.
Regtech, a sub-sector of fintech, helps businesses face regulatory challenges in financial services using technology to address risk and regulatory challenges. From speeding loan origination to sharpening surveillance against fraud, money laundering, and insider trading, financial institutions now look to technology to improve efficiency and lower risks.
“RegTech isn’t just adding technology to existing processes. It can change the way you think about regulatory compliance. Once you understand its transformative potential, you may find ways to create a competitive advantage.” David Choi, US RegTech Leader
Regulatory compliance is one of the most time- and resource-consuming activities for financial institutions, and technology such as blockchain can bring significant savings, as well as the ability to report more accurate information to regulators. Blockchain emerged as the underlying technology behind bitcoin and other cryptocurrencies. The blockchain is a distributed network which means that even if one version of the ledger is corrupted or compromised, other instances will remain unaffected. This makes the technology a valuable tool for many applications across a wide range of industries.
With an ever-evolving corporate and consumer focus, the need for choice and an improved user experience is paramount for financial-service companies. Those businesses that fail to incorporate technology into their organisation will lose out to the innovators in this sector.