It goes without saying that technology has impacted almost every aspect of our lives. In the business world, just about every industry has gone through drastic changes in the past few decades. However, there seems to be one major exception to this phenomenon and it’s evident in the financial world, especially among banks and insurers.
These industries have for long relied on the same, high-profit business models that have kept them decades behind when it came to technological innovation. But with the advent of cryptocurrencies, crowdfunding, mobile payments, and digital wallets, the leaders of the financial industry are facing a new and formidable set of challenges.
A New Generation of Innovators
For this sudden change in the correlation between technology and finance to occur, there has to be a group of people responsible, ones with new ideas and a different way of thinking. Much of this can be owed to recent innovations in the way we learn and absorb knowledge about the world around us.
For example, online courses are making it easier than ever for students to learn years’ worth of tertiary education within a much shorter period of time. This online finance MBA is not only affordable but also opens up the possibility for students to enter a variety of career paths including financial analyst, risk manager, and investment banker.
Modern online payment processors such as PayPal and Square generally offer low to nonexistent fees for transactions and ownership of an account on their services. Their versatility as a highly compatible, accessible, affordable and versatile payment solution has made them a serious threat towards traditional banks.
For banks to survive against this new competition, they need to either offer a superior set of services or drastically reduce their fees. Either way, this is good for consumers as it changes the balance of power between us and banks. If they can’t keep up, their customers will switch to superior alternatives.
Enhanced Customer Experience
Modern communication technologies have made it easier than ever to bring the entire interaction between consumers and their banks into the digital world. Just like with the above situation, financial institutions need to shift away from costly, time-consuming physical interactions in order to keep up with their online competition.
For banks and unions that digitize the customer journey, there are significant benefits for both parties. They’ll have to spend less on resource allocation towards staff and premises and you’ll spend less on traveling, making phone calls and paying for consultation fees.
Whether it’s Amazon’s Alexa or the Bank of America’s Erica, we’re seeing a significant increase in the adaptation of smart machines in the consumer experience. Aside from virtual assistants, this includes anything from smart advisors to vision systems to natural language processing technologies.
This investment in the consumer’s digital experience makes perfect sense for a bank. The better your relationship with your customer and the more they enjoy interacting with you (even when it’s technically not you), the more profitable your business is. It’s exciting to see what the future will bring when it comes to how we interact with businesses
Robotic Process Automation
Automated systems have quickly found their way into a number of industries, making them more efficient and accelerating growth. But with banks, security concerns and the risks that come with making financial transactions have stumped the adoption of automation technologies in the industry.
However, we’ve seen more confidence in this aspect of tech in recent years as robotic process automation (RPA) has become a standard system in many banks. Statistics have found that the adoption of this technology can result in an average of a 50% reduction in the cost of administrative and regulatory processes.
A recent turn of events in the finance industry has created a compelling set of reasons for tech-ignorant institutions to adopt new technologies, especially artificial intelligence. New technology such as machine learning algorithms and cloud computing, increased competition, heightened customer expectations and explosive growth of data are all to blame.
The simple fact that AI is beneficial for banks has resulted in an increase in the implementation of these technologies. Artificial intelligence can help financial institutions in a number of ways, especially when it comes to creating meaningful data out of the vast reserves that they hold.
These are just some of the many impressive technologies that are making their way into the finance industry. It’s clear that they hold significant value for everyone including institutions, the people that work at them, and the people who trust them with their money. As for what comes next, only time will tell. Rest assured it will be exciting.