Today’s hyper-connected digital world is an exciting place for professionals in the financial services industry. This is because the technological developments of recent years have dramatically expanded what is possible with our available tools. Financial technology (FinTech) often lags behind other areas because of the heightened importance of security; after all, the clients of any financial services firm trust the company with exceedingly sensitive information in addition to their overall financial well-being.
The potential benefit of adopting technology in the finance space nevertheless outweighs the risks, especially as significant effort goes into the research and development of state-of-the-art security measures. With this in mind, it’s useful for professionals to consider how different the financial services landscape might be in the near future.
Let’s take a look at three of the most promising financial services trends to keep an eye on in the next few years:
1. Blockchain Technology is Disrupting The Financial Services Industry
Blockchain technology is already in the process of shifting the financial services paradigm towards a decentralized, digital state. This is already evident in the world’s two most popular cryptocurrencies, Bitcoin and Ethereum. But to truly appreciate the potential impact of cryptocurrencies and blockchain technology on the financial services industry, it’s important to understand exactly what they denote. A blockchain is a publically available digital ledger system that’s secured through cryptography. It is decentralized in that it isn’t owned or managed by any one entity or institution, like banks or governments.
Blockchain technology is both a threat to and opportunity for financial services companies. The threat primarily stems from the fact that it is swiftly outdating many of the slow and expensive processes that the industry has traditionally been based on, so those organizations who don’t update their processes and services are bound to lose valuable market share. The opportunity, on the other hand, is the increased security and speed of blockchain-based P2P financial services platforms.
2. Mobile Payments And Transfers Reach Customers Wherever They Are
Another financial services trend to watch out for is the increased popularity of mobile technology as a primary way to make payments and transfer funds. The unprecedented convenience of using financial services securely while on the go directly caters to trends of usability and mobility in the wider public.
This trend will inevitably be stoked by blockchain technology, as it naturally lends itself to mobile payments with its security and flexibility. Financial services organizations that want to succeed in the future should develop their mobile presence not only through a well-designed mobile application with seamless UX design, but also through blockchain-based mobile payment systems and crypto wallets. This has already been achieved to great effect by financial services giant J. P. Morgan.
3. AI Will Play a Bigger Role in Financial Services Technology
As artificial intelligence and machine learning (ML) technologies develop, they are also starting to make an impact in the financial services sector. For example, the security element of FinTech is using ML algorithms to better detect potential cyber-attacks and fraudulent activity. This will only continue into the coming years and decades, as security technology is forced to combat increasingly sophisticated malware and threats.
AI is also going to be used to increase efficiency in many financial services processes, as repetitive tasks like creating financial reports can be automated. The accuracy and dependability of these algorithms is also only set to increase in the coming years, which will further bolster the wide-scale adoption of AI technology in the FinTech space.
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