Emergent tech that are poised to drive the financial and banking domain in the very near future Part 1
This blog by AICorespot goes into detail on the leading five emergent technologies and trends (for the 2020s and beyond) within the banking/financial services domain like cloud adoption, cloud banking, BPaas, Cybersecurity and Instant Payment.
The financial services and banking domain have witnessed a massive paradigm shift in their respective technological landscapes over the course of the previous few decades. The customer-base’s expectations have shifted in the direction of Omnichannel platforms and the utilization of gadgets and virtual assistants such as Amazon’s Alexa, Google Home, and Apple’s Siri. Wearables have penetrated the market, with their userbase increasing on a daily basis, in alignment with the latest, advanced technologies.
Banking and financial enterprises are required to outfit themselves to obtain the advantages of latest tech offerings as specified below:
1. Cloud Adoption
Banking enterprises can undertake migration of their current applications (core banking / risk administration applications / digital banking products) to a cloud environment as an aspect of their IT road map.
Banking enterprises would accomplish the following benefits as aspect of their IT application undergoing migration to a cloud environment.
- Data privacy and its security are critical; banks are obligated to safeguard client data and secure transactions – this is not an option
- Cloud providers make sure that all data recorded in the cloud are tightly secured and unable to be tampered with
- Adhering to compliance – Banking enterprises / FIs want to make sure client data within the cloud are recorded according to prevalent regulatory frameworks
- Major providers such as Microsoft Azure, AWS, and Google Cloud will comply with storage regulations of the specific nation its operating in
- Within GDPR, there are independent cloud data centres maintained in Europe to record data within the cloud to stay compliant with EU regulation
2. Cloud Banking
Cloud banking is an upcoming tech that banking and financial enterprises would prefer to integrate into their operational framework. This is primarily due to the reality that banking enterprises are always on the lookout to minimize expenditure
and provide improved product and service offerings within the corporate banking and consumer/retail banking spaces.
Being first-to-market, or at least faster to market, with fresh product launches will be the critical distinguishing aspect within the cloud banking domain, with the assistance of API’s integration, which can be simple to integrate with another ecosystem or fintech organization in quick time. Enterprise level assistance will the crucial distinguishing aspect within cloud banking, as data across the group level can undergo integration and be provided as services to their clients.
Based on the IT road map, banks can determine the data and products, which require to be on cloud and premise and undertake deployment of the solution accordingly. Further, banking enterprises can determine the storage of data within public, hybrid cloud, or private cloud according to the business decision. This can subsequently assist banks in fulfilling expectations of regulation and compliance framework levied by the central bank / regulatory authorities. A lot like GDPR within the European context, or CCPA regulation in California, banking enterprises are required to comply with particular regulatory standards and record data accordingly in their related geo locations.
3. Business Process as service (BPaas):
Banking enterprises and financial institutions would desire to harness technologies and pay just for the services provided by the product / software vendors. This will be the emergent trend in the days to come. In the future, banking institutions will reap the subsequent advantages with BPaas.
- Minimizes software license and product expenses
- Minimizes expenses in relation to operation towards maintenance of data centres
- Pay for service provided by the product / software vendors, on the basis of the transaction volume or based on user licenses according to the formal agreements
- Bank can go live to any geography with prior-configured products provided by the vendor to begin with
- Meeting regulatory and compliance standards, on the basis of central bank regulations
4. Cyber Security
The banking and financial domain has been experiencing massive pressures with financial data compromises/breaches/crimes with the passage of several years. Cyber security plays a critical part, as banks provide a majority of their service through Omnichannel platforms and transaction processing through differing payment networks throughout the globe.
Banking institutions are expected to possess an endpoint security solutions to surpass data breaches that happen across exterior networks/payment gateways. This will make sure that the financial information is not adulterated by malicious coding or information breaches as aspect of the transaction process.
- Commercial banks tout innovation in tech, particularly in cyber security
- Two-step/Multi-factor authentication, VR and facial recognition are some of these technologies
- Banking firms additionally deploy firewalls and anti-malware applications to avert data breaches that are an aspect of transaction processing
- AI/ML tech can execute security and system audit to detect suspect/fraud transactions.
- AI/ML facilitates banks to undertake analysis of the weak region in the current application and develop additional security
5. Instant Payment
Instantaneous payment mechanisms is the new emergent trend within the payment space for banking and financial institutions. This trend will assist the client to harness the tech and process the payment in an instant fashion with no compromises on transaction security.
Banking institutions and market players will have a level playing field featuring additional integration with regards to 3rd party Fintech / Regtech organizations to provide instantaneous payment service and fulfil the regulatory requirements of the central banking institution.
The ERPB (Euro Retails Payment Board) put forth that at least a single common European solution for instantaneous payments in Euro should be available to all payment service providers within the European Union. This decision was undertaken by the ERPB in 2014.
Banking and financial enterprises within the United States work the RTP (Real Time Payment) framework, which is broadly leveraged for real-time settlement within themselves. The USA’s Clearing House is collaborating with critical payment service providers, banking institutions, and corporate credit unions, to make sure that each financial enterprise within the USA will have the option to access the RTP network very soon.
There has been a technological paradigm shift occurring over the course of the previous few decades and they have drastically evolved how interact, speak, buy things, and run their businesses. Emergent tech within the financial services space have created steady disruption in how client communicate with their monetary
resources, what they are expecting from financial enterprises, and how these enterprises function. Currently, nascent technologies make these procedures simpler, more effective, minimize errors, enhance communication, and alter how clients observe and interact with money.
Most critically, financial enterprises can reap massive advantages from such tech. Emergent tech within the financial services domain such as RPA and chatbots minimize man-hours, enhance the quality of client relationships, and enhance profitability. While the influence of new technology within financial services will be different on the basis of the function, you can probably adapt and massively benefit from several of them.
Expect these trends in emergent tech for fin services detailed in the second part of this multi-series blog post to become part of your enterprise’s tech stack, if they are not already.