Technology and digital services have become part of our lives that we can no longer live without. We use such new solutions every day and there seems to be no way back to the days when modern technology was reserved for just a few sectors of industry. Nowadays, modern technology and digital services are ingrained in almost every aspect of our lives and the financial sector is no exception. Money is transferred more easily; we have access to our accounts and financial resources from anywhere in the world and financial institutions are continuing to be even more reliant on modern technology. In this text, we explore some of the key changes that are making the greatest impact on the financial sector brought about by digital technology.
This notion encompasses financial institutions trying to maximize the potential of available hardware and software. The concept originated in the 1950s’, when credit cards were introduced, and it continued to develop with the subsequent rise of ATMs. However, the term is today used to denote digital banking technologies such as digital banks, wallets, blockchain tech, and more. We are now accustomed to online budgeting tools, spending tracking, and even automated chatbots for customer service. Until not so long ago, a suspicious charge on your account may have elicited a phone call from a representative, but now robocalls are made automatically as the transaction itself is being conducted (and in many cases, declined). All these technologies are shaping the way in which financial services are developing and all those working in this industry are trying to lead the way, or at least catch up.
Most of us remember the times when banks offered various incentives for opening an account with them. The incentives were provided in the form of tote bags and toaster ovens, which were later replaced with promises of low fees, no fees, free checking, cash back, and more. Such features are now expected and we would never opt for a bank or credit card company that doesn’t offer an associated mobile app, for instance. Digital banking has developed so much that there are digital banks that exist solely online, i.e. with no (or few) brick-and-mortar locations. This means their operating costs are much lower, which in turn means they can offer better conditions to existing and prospective clients. We can now accomplish deposits and loan applications through a mobile phone, which raises the question whether we will need banks with physical branches.
Most people associate blockchain technology with cryptocurrencies, but the term actually encompasses much more. Blockchain – the technology behind the digital currency Bitcoin – is no longer reserved only for those dealing with Bitcoin mining. It is becoming more widely adopted and transforming the world in a way that will change the financial sector forever. Experts say that blockchain and associated technologies have the power to be one of the most impactful innovations in financial services as well as logistic technologies going forward.
Artificial intelligence and machine learning
There is no denying that AI and machine learning will have an even greater impact on the financial industry in the future. Complex algorithms are used by banks and credit card companies to detect fraudulent activities. As we’ve already mentioned, while a suspicious activity used to elicit a phone call from your bank, now AI programs and detect fraudulent activities and react in a matter of seconds. AI and machine learning are playing a particularly important role in fighting cybercrime, since criminals are resorting to more advanced and sophisticated methods, as well. Finally, AI and machine learning use complex algorithms created from enormous amounts of data to provide insights into consumer behavior, investment opportunities, regulatory compliance, and more.
As expected, modern technology has influenced the workforce employed in the finance industry. According to a recent study, the top financial jobs being hired in the UK are investment banking analyst, software engineer and paraplanner. Also, more traditional jobs, such as salespeople, customer service representatives and HR managers, now require different sets of skills. The new environment, created by advances in technology, dictates the need for different types of professionals and as technology continues to evolve, there will be an increased need for a viable workforce to meet the rising demands and challenges which develop and we should not forget that transitioning towards digital services and technologies will require the right individuals to be in place in order to ensure these developments are successful.
We can rightfully conclude that technology will continue to shape the financial industry, which is one of the areas most impacted by the digital revolution. The trend is likely to gather pace even more, which means that both those working in the industry and end-users will have to embrace the changes.