The finance industry was introduced to many influential technologies over the last year with startups and technology agencies driving change. Financial Services (FS) has always had a very traditional way of working and therefore, is often rigid in the products and services they can offer, however, thanks to the latest technologies, customers are expecting a more fluid way of banking and are expecting more from their FS providers. Here are 7 top technologies FS institutions need to know about:
Blockchain and Cryptocurrency
2017 was the year of Bitcoin. After dramatically fluctuating throughout the year, the cryptocurrency hit a record high in mid-December passing the $19,850 mark but began to drop again within days. Regardless of the unpredictable value, Bitcoin has rallied a lot of interest in cryptocurrencies across the globe. The excitement has contributed to the surge in not only Bitcoin but other cryptocurrencies, like Litecoin and Ethereum.
2018 will be the year central banks begin to trade with cryptocurrencies. Cryptocurrencies will be added to the list of eligible currencies and central banks will pour investments into it. Bank of England Governor, Mark Carney, has cited cryptocurrencies as part of a potential “revolution” in finance. Banks can no longer ignore the rapid growth and popularity of cryptocurrencies meaning that it is more than likely that central banks will soon consider a digital version of their own currency.
Blockchain, the digital system which enables cryptocurrency exchanges, is also an exciting prospect for FS. The complex nature of the transactions means that it is difficult to corrupt or hack. Blockchain can independently record and verify transactions. The system encrypts each individual transaction across different computers, verifying the transaction by agreeing on a particular answer to assign a unique signature. Once processed, the transaction cannot be altered, only added to, and this will trigger a notification to all relevant systems.
In a world where cyber security is a pressing issue across all industries, Blockchain can provide some much-needed relief and assurance to banks concerning security. It could also revolutionise payments between consumers and vendors as Blockchain actually eliminates the need for a central intermediary to do asset transfers. Increasing efficiency, Blockchain compresses the steps into one step that can be done within a few seconds or minutes.
As the world becomes more digital, cybersecurity and the presence of hackers has become ever-more prominent. Financial services have thrown heaps of money at securing their network and this increases every year, but as the security measures get more advanced, so do the hacking techniques.
The finance sector is one of the most popular targets for hackers, with bank account fraud being at the top of the list. There are several steps FS and other industries can take to protect themselves from a security breach, but the fundamental focus for security teams should be education. Educating your staff on how to spot and report a potential security threat is the first step in tackling cybercrime.
Artificial Intelligence (AI) has become a major player in fraud prevention. AI’s data analysis skills mean it can examine masses of data within seconds, easily identifying abnormal behaviours and discrepancies. AI can autonomously learn and predict making the technology the most reliable and efficient way to tackle fraud. Artificial intelligence will play a major role in many industries with FS being amongst those who will immediately feel the benefit.
Another use of AI will be in the form of chatbots. Chatbots, for example, can offer customers around-the-clock customer service platform that can be accessed almost anywhere with an internet connection. Unlike human customer service assistants, AI assistants are available at any time of day and can offer almost instant replies based on the masses of data and insights they have readily available.
Chatbots can learn and adapt their behaviour to suit a customer’s needs and, more importantly, your brand. The service can be regulated and updated frequently to align with your services, products and business goals. As the technology evolves, the services your chatbot can offer can extend further than customer support. The AI-powered chatbot can assist businesses to gather information about their users, information that can be used to offer a more personalised and focused service, like recommending tailored products and services.
Mobile and online banking have been around for so long now that there are very few if any, Financial Service (FS) businesses who do not offer one. Accessible banking is a must for customer’s nowadays and the products and services offered through these platforms are constantly evolving.
Like chatbots, the information gathered from customers using these online platforms will drive personalised suggestions on how customers can better use the products and services the FS business offers. This idea also has the potential to evolve into a premium ‘concierge’ service where customers can request a booking and the application or digital assistant will take care of the request.
Human Digital Interface
Thanks to the capabilities of our smart devices improving, the human digital interface is becoming more efficient, more accessible and more secure. The improvements of voice recognition services and the introduction of fingerprint and facial recognition mean that customers no longer need to go through the hassle of long-winded verification processes in order to access their accounts.
A few banking apps have transferred their verification process over to utilise smart devices’ functionality, however, with the imposing threat of cybersecurity, digital banking customers are looking for the most secure methods to protect their accounts. It would be unwise for FS services available via smart devices to ignore its capabilities.
The usability of our smart devices is ever-increasing. As mobile technology becomes a more integral part of our daily lives, it is important that the products and services offered on mobile by FS are reflect this. E-wallets and mobile payments have become increasingly popular with more and more vendors accommodating this.
The rise of E-wallets and mobile payments reflect how much the functionalities of devices reflect trends within FS and other industries.
Open Banking and API
Fintech startups have dominated the landscape by utilising APIs to their full potential. These startups are able to innovate with agility and speed that larger established banks and financial institutions are struggling to duplicate due to their complex infrastructure and size. Large enterprises must adopt a more agile approach to keep up with the innovations of the startups. Creating applications using APIs is crucial to ensure success. API’s help retrieves the appropriate information in the quickest and most efficient way.
The introduction of open banking and PSD2 mean regulators in the UK and EU are forcing the banks to open up their masses of customer data to third parties in the form of secure APIs this year. This creates more choice for consumers on where and how to manage their money, creating a more open approach to banking.
With more banks recognising the benefits of APIs, the process of carrying out payments and other banking transactions would be quicker and simpler, as well as, giving consumers more choice on how and where they handle their money. The broad access of information that banks will be forced to share, will power applications and services which will advise users on the financial services best suited to them. Users will no longer have to use their bank as a one-stop-shop but utilise different providers for the services they require.
Developments in technology are fueling the mass digital transformation of financial services. Emerging technologies, like AI and Blockchain, are enabling banks and FS businesses to improve their products and services contributing to a more valued customer experience. FS customers will now have access to a range of financial services and those enterprises who are quick to recognise and adopt the latest technology trends will find that they will not fall victim to the change.
To find out more about the emerging technologies set to impact finance in the coming months or to understand how your business can deploy these technologies, get in touch with B60 today to speak to one of our mobile and digital experts.