The financial industry has undergone plenty of changes throughout the past couple of decades. As technology continues to transform services, processes, and more, we’re only going to see more changes from here on out. Whether it’s existing technologies that are being developed further or groundbreaking new ideas that have just been implemented, technological advances will continue to reshape the finance industry.
Advances in technology don’t just affect the finance industry itself, but also its employees and consumers. Most tasks have already moved from paper-based to digital as the financial services industry continues to be disrupted by technology.
FinTech on the rise
For decades it was considered borderline impossible for new companies to break into the financial services industry. Alas, no longer. FinTech companies such as Creditfix have been finding new ways to not only get into but even disrupt the financial services industry. These so-called disruptors are relatively young companies — often startups — that successfully implement innovative ideas and grow at a hare’s pace.
Whether it’s insurance or mobile payments, there’s no area of the finance industry that these disruptors can’t reach. These companies often attack the most profitable elements on the value chain of the financial services industry. Even large corporations worry that their dominance could be quickly overthrown by a single FinTech company in a timespan of less than a decade.
The number of investments in FinTech tripled worldwide in 2014 for a total of over $12 billion. Even banks have spent around $215 billion on information technology, software, hardware, and contractors just to keep up with the competition. All of this spending to stay up to date in the FinTech game is making a huge impact on the finance industry.
It started with Uber allowing you to share a ride with individuals headed the same way as you, now you could be sharing more than just a spare seat. In a few years, consumers may look elsewhere for their banking needs rather than going to the nearest Wells Fargo or Bank of America.
The system dubbed “sharing economy” is now expanding beyond transportation and accommodation — it’s headed straight for the financial services industry. The so-called sharing economy will consist mainly of decentralized asset ownership — similar to the cryptocurrencies like Bitcoin and Ethereum that we see today — that utilize IT and machine learning to make matches between users and providers of capital.
This alternative to getting a bank loan may not seem like much, but in the grand scale of things, it is an absolute game changer for consumers.
As the funding and innovation in the blockchain industry only continue to grow, blockchain and cryptocurrencies will begin to conquer lands beyond retail purposes which means that we could see Bitcoin being used at an institutional level.
While the majority of these blockchain companies may not survive the next decade, the blockchain industry will become an integral component of the technology and operational infrastructures used by financial institutions.
During the early days of automation, the finance sector was among the first industries to capitalize on its potential applications and benefits. From automatic trading platforms that can autonomously trade stocks, ETFs, and currencies, to machine learning software that could predict — to an extent — whether or not a stock would rise or fall, the financial industry has been reaping the benefits of technological automation ever since its inception.
Recent studies show that automated banking could replace as much as 30% of bank jobs worldwide over the next decade. Further advances in the field of automation will make the use of financial services faster and easier for consumers.
Breakthroughs in the big data and analytics field have also helped the automation industry improve its already impressive system. For instance, automated financial advisors could collect data, compile it, and use it to determine the best course of action for a client — all in a matter of seconds, no less!
Around twenty years ago, a large number of financial institutions created e-business units to capitalize on a trend of e-commerce interest, and, as time passed, this became the new norm for businesses.
Large investments in technology and internet development brought businesses to a level of efficiency never before seen. Today’s digital landscape covers a wide range of areas from operational efficiency to customer experience, to big data and analytics.
One of the biggest industries that has gone digital is the commercial banking field which has utilized advances in technology to improve their infrastructure for taking payments, selling insurance, growing client accounts, and giving out loans.
Big data is a crucial part of any strategy aimed at increasing revenue and profit margins. It’s important to have an in-depth understanding of what your consumers hold dear to their hearts. In the olden times, customer feedback was limited to surveys and focus groups, and the data gathered was often unreliable.
Technological advances have given companies the opportunity to gather individualized and accurate data about the behavior of their customers. Knowing what the end-user of a product or service does, wants, and needs is paramount to offering the most value while still maximizing profit.
Self-learning machines are no longer limited to the world of science fiction. While it’s not exactly Skynet-caliber, artificial intelligence software that possess the ability to learn on their own are already helping financial institutions pinpoint the source of issues, mitigate risks, and lower operating costs by increasing the efficiency of internal and external systems.
Machine learning developers often focus on implementing basic human qualities such as self-education, pattern recognition, reasoning through logic, and even the ability to understand emotional and social queues.
There are already existing robots that can recognize specific objects, analyze the environment around them, and converse with homo sapiens in a human tone. If you’re skeptical, just have a look at the performance of self-driving cars in live, on-the-street tests.
As time goes on, robots will be able to perform increasingly complex tasks. While there are still some technological hurdles that face the development of sentient robots, the next few decades will slingshot the robotics industry to new heights.
Should you start preparing for the point in time where robots become too smart to follow orders and declare war on the human race? While that scenario is quite unlikely, being prepared certainly couldn’t hurt.