Though the financial sector has developed at an incredible rate in recent years, it seems that customers are not satisfied with the current status quo. There are many new developments which will only accelerate the process of growth and change within this industry. Technology is at the heart of these innovations; 62% of people consider easier and faster banking one of the best technological developments over the past decade.
As traditional banks would like to think, this sector is still not safe from younger banks like Monzo and Starling. These two examples show that they have matured into formidable rivals for customers and their cash, putting pressure on other well-established companies to step outside their comfort zone, innovate rapidly, and embrace a fail-fast culture.
The Financial Services sector is one of the most highly regulated in the world. Regulatory compliance costs are substantial and growing, so financial institutions must be able to reduce their risk while maintaining controls. The speed at which technology changes poses constant challenges for financial services organisations, making it difficult to keep up with potential opportunities and threats faced by competitors unless they embrace a culture of innovation.
Here is a list of the top 7 technological changes in financial services:
1. Blockchain and Cryptocurrencies
88% of senior decision makers believe that blockchain will become more widely used, with 28% saying it will be mainstream within the next 3 years. However, only 17% currently use or plan to use blockchain technology in their business.
75% of senior decision makers think cryptocurrencies will become more widely used, with 45% saying it will be mainstream within the next 3 years. Only 10% currently use or plan to use cryptographic technology in their business.
2. Machine Learning and AI
Machine learning and Artificial Intelligence (AI) is already having a major impact on the financial services industry. 30% of respondents already use or plan to use machine learning in their business within the next 3 years.
3. Digital Wallets
45% of senior decision-makers believe digital wallets will become more widely used, with 24% saying it will be mainstream within the next 3 years. However, only 14% currently use or plan to use digital wallets in their business.
66% of decision-makers believe chatbots will become more widely used, with 33% saying it will be mainstream within the next 2 years. Only 16% currently use or plan to use chatbots in their business.
Although fintechs are making the biggest impact on the financial services industry, they aren’t doing so without resistance from traditional banks. 57% of senior decision-makers believe fintechs will become more widely used, with 34% saying it will be mainstream within the next 3 years. However, only 7% currently use or plan to use fintechs in their business.
With so many companies implementing new technology at such a fast rate, it is difficult to predict what will happen with financial services by 2020, particularly when it comes to AI and machine learning. All we know for sure is that one thing’s for certain: the sector will change more in the next 3 years than it has in the past 30.
AI is also improving the personalisation of financial products. Some companies are using artificial intelligence to offer better pricing, term lengths, and discounts for specific groups of people. With the availability of information on every individual from around the world, artificial intelligence software can recommend a range of financial products for each person.
At the moment companies such as All Aspects Financial offer personalized finanicial advice but in the future AI will likely take over this role.
7. Biometrics – Especially for Mobile Payments
Biometrics is used for identification and authentication of transactions via mobile payment solutions. One such example is the biometric fingerprint scanner that enables customers to authenticate payments by just touching the surface of their phone against a point-of-sale terminal.
Another way in which biometrics are used in mobile payments is through the face scan feature on Samsung Pay. The face scan feature on Samsung Pay is in response to expected interest from costumers in using facial recognition in place of passwords in the future.
Biometrics in mobile payment solutions are not new, but they are evolving with new technologies. As these technologies advance, biometrics will become more widely available and accepted as a form of security measure for mobile payments.
With 86% of senior executives believing that significant change is going to take place in the next three years, it is clear that financial services companies must use technology to their advantage if they want to continue thriving in this sector. In short, financial institutions need a “fail fast” approach when it comes to development or else fall behind.