The year 2020 and onwards will see transformational changes in how technologies impact businesses. Financial Technology-led innovation in products and services will be in full swing as businesses will leverage FinTech (Financial Technologies) to build new business models. This is apparent from the fact that the FinTech market is continuously growing. According to a report, it was valued at $127.66 billion in 2018 and is expected to reach $309.98 billion by 2022. Another report says that the FinTech adoption rate worldwide grew by approximately 64% in the year 2019.
However, it’s important to closely scrutinize the financial services technology trends as the disruptive forces that were a hit till 2019 may not possibly show signs of success in 2020.
Top 7 Emerging Technologies in the Financial Services Industry in 2020
The following are the seven most imminent financial services technology trends in 2020 that will help businesses deal with both existing and new issues. These emerging trends in financial services will help banking, insurance, and other financial institutions implement security, improve accessibility, deliver convenience, and most importantly, build trust.
- Cognitive Technology
AI covers multifarious aspects of the financial services business and probably, finds its best use cases in the industry. With its high-computing and cognitive abilities, AI helps financial businesses manage risks, detect frauds, and identify data patterns that enable them to make decisions with minimal human intervention. Besides this, it also helps consumers customize financial products and services, perform budget analysis, obtain saving advice, and realize the best of digital payment and mobile banking experiences.
- Conversational Chatbots
Chatbots existed for decades but lost their charm a few years back because of their inability to deliver human-like experiences. However, with advances in technology, AI-powered chatbots have once again gained popularity. Gartner predicts AI-backed Chatbots will handle approximately 85% of the total business-customer interactions by the end of 2020. Financial services providers can use conversational AI solutions to deliver humanized experiences to customers. AI-powered chatbots learn and grow from the existing database and ongoing interactions to deliver bespoke answers to customer queries, provide relevant suggestions, and perform beyond expectations.
Blockchain is undoubtedly going to be the spine of the sharing economy. It is one of the most prominent technologies that instill security and accountability in the product and service delivery landscape. The technology scrutinizes transactions in a cost-effective, decentralized, and verified manner. It reduces dependency and supports proper book-keeping. Blockchain is one of the financial services technology trends that will underpin the two most important pillars of the industry, i.e., transparency and trust.
- Data Analytics
Data plays an elementary role in the banking and financial services business and when mapped with technologies such as data analytics, it is sure to deliver business value. Data analytics enables businesses to successfully process enterprise-wide data and gain actionable business insights that help in decision-making, product development, risk management, fraud detection, and more. The technology also helps financial businesses revisit past performances, optimize ongoing tasks, processes, and functions, as well as, get a glimpse into the future. In the coming years, more and more financial institutions are expected to leverage data analytics to capture, control, and regulate data to build efficient, smarter enterprise and open a new world of opportunities.
When we talk about automation, efficiency, speed, and precision come to mind. If we believe the research reports, technologies such as robotic process automation (RPA) can help financial businesses save costs up to 25-30% approximately. The technology helps financial services providers automate tasks that are repetitive and data-intensive. It helps to follow a software-based approach to improving process accuracy and task execution. RPA will be majorly used to reduce manual dependency and latency and to increase productivity across finance verticals.
- Cloud Computing
Financial services providers have reached an age where mobile banking pervades the demand, insurance transactions are done online, and tech-savvy customers are fond of digital wallets. The cloud computing technology helps financial businesses achieve all these seamlessly. The digital-backed sharing economy never sleeps and customers, laced with smart devices, want to communicate and transact 24*7. For the fact that cloud computing supports mobility in a true sense and helps keep up with the digital-born customers’ pace, financial businesses have a lot of expectations from the technology. It stores and enables instant access to data and provides on-demand availability of computer resources without direct management by a user.
Digital-age has its own challenges. Financial businesses deal with personal and financial data of customers, which is sensitive. Unfortunately, it is the data that is the most vulnerable asset in a connected ecosystem. Financial services providers are investing in access delegation framework such as OAuth2.0 (Open-standard Authorization), which protect them from third-party attacks and helps them build robust APIs (Application Programming Interfaces). Such technologies and frameworks not only keep data secure but also help businesses comply with finance regulatory standards.
Technologies Will Be At the Core of Financial Services Systems
The emerging technologies in the financial services industry have impacted almost all the business aspects in the years after 2010. Dizzying practices are gone, processes have become more transparent, transactions are layered with security and precision, and customers are offered a great deal of personalization across products and services. With the above-mentioned financial services technology trends at the core of systems, businesses should well be able to enhance their consumer intelligence capability, which can be further used to strategize customer-centric growth.