Financial Services
Top Emerging Technologies in the Financial Services Industry
Spurred on by the ever-evolving digitisation of businesses and rising customer expectations, the banking and financial services (BFSI) space has undergone a massive transformation in the past few years.
Consumers expect an increased degree of control and visibility in banking services. The banking industry would do well to adopt technology that allows consumers both flexibility and personalisation. Open banking is on its way to becoming a key financial services trend in 2024. With 73 per cent of buying decisions being influenced by customer experience, it is no wonder BFSI players are going out on an arm and leg to reduce friction at every touch point and improve customer satisfaction. Artificial intelligence (AI), machine learning (ML) and generative AI (Gen AI) are technologies that banks can leverage to improve customer experience. At the same time, the rampant use of technology also increases the risk of cyber security and fraud. In fact, the global spend on security and risk management is expected to reach USD 215 billion in 2024. Innovation in financial services is going to be a key aspect in 2024, and there are several emerging technologies that will support this.
Innovating with technology
Technology has disrupted the financial services industry, giving rise to new products and services. Banks and financial institutions are increasingly adopting new technologies to give them the necessary edge in a highly competitive space.
Leveraging the power of AI
As with all other industries, AI has the power to transform the financial services sector too. Companies are already well on their way to leveraging the power of AI, with the sector expected to more than double its spend on AI to $97 billion by 2027, with a compound annual growth rate (CAGR) of 29 per cent. Investment companies across the world are using AI for various purposes — from research and development on macroeconomics, customising portfolios for consumers based on their appetite for risk and even to obtain an aggregate view of customer attitudes that may influence business decisions. Hedge funds have already embraced generative AI (gen AI) to generate reports and several banks and fintechs are using chatbots to spruce up the customer experience. That apart, financial institutions have realised that deploying AI across operations and leveraging consumer behaviour data will facilitate seamless customer experience. AI/ML systems are also increasingly being used for automating fraud detection, credit scoring, forecasting market trends, robotic process automation and to build intelligent financial accounting systems with close-to-zero error rates, resulting in improved speed and agility of financial institutions.
Increasing adoption of blockchain technology
While distributed ledger technology (DLT) has lost its initial sheen, companies are still exploring the numerous practical applications due to its numerous advantages of security and immutable transactions. Blockchains improve security in financial transactions, as data blocks cannot be changed unless approved by all users in the networks, making it difficult for hackers to infiltrate. By maintaining a secure audit trail, blockchains can help to minimise financial fraud, resulting in lower vulnerabilities, reduced costs and increased compliance to stringent regulatory requirements.
Adopting open banking
Open banking allows financial services companies to access consumer data from both banking and non-banking applications via application programming interfaces (APIs). This allows for “networking” of financial data, with consumer data being shared across banks and financial institutions. Open banking has the potential to transform the financial industry, giving both banks and fintechs the opportunity to offer improved services to consumers. For example, a consumer may be able to easily switch from a savings account in one bank to another, without the hassle of onerous documentation. Open banking offers a secure solution to consumers allowing them to access their data across multiple banks. Rather than simply facilitating financial transactions, banks and fintechs can offer holistic financial management solutions with open banking.
In a digital world, the banking and financial services industry is rapidly evolving to keep pace with steep consumer demands, high competition and stringent regulatory requirements. While the adoption of emerging technologies will transform the BFSI space, financial institutions also need to tread a fine line, taking into consideration their responsibility to customers vis-a-vis adopting technology to drive business growth. Ultimately, financial institutions that adopt technology and work towards building trust, transparency and accountability are the ones that will stay relevant in a highly competitive landscape.
How can Infosys BPM help adapt to innovations in financial technology?
Margin pressures and regulatory changes are forcing financial services enterprises to reassess their business models, operations and technologies. Infosys BPM’s services for the financial industry helps businesses adopt emerging technologies to improve business performance and drive digital transformation.
