In the past, banks and insurance companies have had business models that were very stable and made a lot of money. Today, though, they are fighting with innovators on all sides who want to shake up their businesses. Also, the variety and high valuations of these fintech innovators, like crowdfunding, peer-to-peer lending, digital money, bitcoin, and robo advisors, seem to have no end.
Still, this tune might be familiar to some people. Journalists and investors were interested in a similar thing in the 1990s and with digital cash, but neither made much of an impact. Scale, trust, and knowledge of how regulations work have been big reasons why the financial services industry has been slow to adopt new ideas.
Still, investing success in the past can't tell you what will happen in the future, and banks' and insurers' records of battering innovators may be the same. These technologies can have a big effect on the finance industry. Chatbots and automation cut down on the number of hours people have to work in the financial services industry. They also improve relationships with customers and boost profits.
Depending on your job, you can adapt to many new technologies in financial services and get a lot out of them. Using fresh technologies has made things easier, faster, more accurate, and easier to get to. This has changed how people think about and use money.
But the rebellion in finance technology is still going on, and here are some of the most crucial trends that are probable to shape the future of finance. Because of this, most companies or even banks prefer to hire people with an MBA in Applied Finance these days. So, now that we know that, let's look at how technology is changing the financial industry.
Blockchain
Blockchain, a new technology trend changing the world of financial services, is still not used by many people. Blockchain technology is what makes Bitcoin work. Big banks, like JP Morgan Chase, are starting to use it, which is a big deal in the financial world.
Accenture says that investment banks could save $10 billion by moving their clearing and settlement to the blockchain. Even though blockchain is one of the most exciting emerging technologies in the financial industry, it is not yet widely used. Most banks that use blockchain solutions (for things like checking, trade finance, treasury services, and so on) do so on their own.
Smaller financial firms may have to deal with this big problem without figuring out a way around it. Even though blockchain has only been around for a few years, it has quickly become a popular way to make payments, find fraud, get loans, make contracts that run on their own, and more.
How to Use Open Banking
In the past, the financial industry has been very protective of customer information to keep its market advantage. Banks have often completed this by denying access to possible competitors, but sometimes they have kept customers from having full control over their information. Data privacy laws have led to a resurgence of open banking, making it easier for fintech firms and conventional banking to work together.
Open banking is predicted to bring in $43.15 billion by 2026. In 2018, it brought in $7.29 billion. With open banking, fintech companies can use big data to make better services that assist people in paying off their debts, making more money, and investing in ways that make them more money.
Artificial intelligence creates a lot of value
As machines figure out what causes under performance, automatic factor discovery will be used to improve financial models across the sector. AI will also use knowledge graphs and graph computing more to represent ideas. They can help find patterns in complicated financial networks by using a wide range of different data sources. This will have a lot of effects for many years to come.
Lastly, analytics that include better privacy protections will encourage using as little data as possible to build financial models or using only relevant, necessary, and properly cleaning information. One of them is federated learning, a method of dispersed machine learning that brings computing power to the data instead of the other way around to solve problems caused by centralized datasets.
Aside from these additional measures, better encryption, safe multi-party computing, zero-knowledge proofs, and other privacy-conscious data analysis techniques will improve consumer protection. All parts of the financial industry, from front to back offices, will use artificial intelligence. Personalized applications for customers include:
● Products and tailored user experiences.
● Intelligent robots that provide services.
● Automatic transactions.
● Robo-advisors.
● Credit ratings are derived from non-financial facts.
Middle-office and back-office applications
● Intelligent procedures
● Superior knowledge models (epitomized by knowledge graphs).
● Fraud detection using natural language processing.
The AI-first institution can be more efficient by automating all manual tasks, including using advanced diagnostics to make decisions instead of or in addition to humans. Also, performance will be better if both old and new AI technologies, like machine learning and facial recognition, are used in many ways to analyze large and complicated customer information in near real-time.
Future banks focusing on AI first will also be able to take advantage of how fast and flexible native digital companies are. They will release new developmental potential in days and weeks rather than months and years. Also, banks will work closely with partners outside the banking industry to create new value propositions that combine journeys, software packages, and data sets.
Conclusion
Overall, businesses may benefit from using these new technological advances in their everyday work. It's impossible to know if technology will work, but many of them do. The key is to look at your financial options, pick the ones that work for you, and keep growing and adding to those options.
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