- On September 30, 2018
Financial services is a technology driven industry that has seen drastic changes over the past few years. In fact, the industry is in the grip of technological disruption. This data-rich sector represents a huge opportunity for artificial intelligence adoption and enterprise investment.
Artificial Intelligence is technology that is taking the financial services industry by storm. Almost every company in the sector has already started using AI in order to save time, reduce costs, and add customer value.
Artificial Intelligence is a collective term for all software that makes it possible for machines to make decisions more autonomously and efficiently. The technology uses enormous amounts of data to glean knowledge of how decisions are made by humans in order to learn to replicate those decision-making processes. AI aims to create machines that can operate without human supervision. According to a report from Synechron, AI development will focus on cognitive use in the sales, marketing, investments, and wealth management and compliance sectors of the financial services industry.
On the other hand, Blockchain is a transformational technology that has the potential to extend digital transformation beyond a company’s walls into the processes it shares with suppliers, customers, and partners. At its core, a blockchain is a data structure that is used to create a digital transaction ledger that, instead of resting with a single provider, is shared among a distributed network of computers.
Blockchain and AI are two technological trends, which, while groundbreaking in their own right, have the potential to become even more revolutionary when put together. Both can serve to enhance the capabilities of the other, while also offering opportunities for better oversight and accountability.
Right now, a digital revolution is occurring that is not just affecting financial industry but has the potential to change the way we conduct transactions in all aspects of doing business.
Over the next few years, you should watch out for technologies related to AI and blockchain that have the potential to disrupt the financial industry:
1. Cloud software will span all business functions
Many financial institutions to manage non-core business processes, such as human resources, customer relationship management, and accounting, use cloud-based software-as-a-service applications already.
According to PWC by 2020 more financial institutions will use cloud software to manage main service offerings, including consumer payments, credit scoring, and asset management.
2. Robotic advisors will improve investment logic
Robo-advisors are a class of financial adviser that provide financial advice or Investment management online with moderate to minimal human intervention. They provide digital financial advice based on mathematical rules or algorithms. These algorithms are executed by software and thus financial advice does not require a human advisor. The software utilizes its algorithms to automatically allocate, manage and optimize clients’ assets
According to Deloitte, robo-advisors use AI-based algorithms to analyze investment logic—such as risk appetite or liquidity factors—to propose the best possible investment opportunities. As this type of Fintech develops, robo-advisory will become an invaluable investment tool.
3. Integration of AI will become the standard
Artificial intelligence is already integral to Fintech companies, but it will become core to traditional financial services organizations as they progress through digital transformation. The possible applications of AI in banking, wealth management, and financial advisory are vast.
4. Blockchain as a distributed ledger technology will improve transparency and lower costs
Blockchain is an electronic ledger of payments that is shared between parties on servers and does away with the need for a central authority. The blockchain has so many potential benefits that it simply cannot be ignored — it can cut out additional costs that may accrue in major areas such as payments, syndicated loans and trade finance. It will be able to cut out myriad layers of intermediary costs when transacting across borders, for example.
The prediction of the experts is that Blockchain technology will only get faster as its scale increases. The more widely blockchain is adopted, the better and more smoothly run it will become.
https://www.synechron.com/, Synechron identifies biggest financial services technology trends for 2018
https://www.pwc.com/, PWC-Financial services technology 2020 and beyond: Embracing disruption
https://www2.deloitte.com/, Deloitte: The digital wealth manager of the future