The world of finance is changing at breakneck speed due to the rise of the internet and big data. Technology and consumer demands are changing every day and influencing the next generation of banking. Today’s fintech startups don’t even have brick and motor stores, relying on cloud technology. This fundamental shift in how banks provide and market their services has sent seismic shocks through the industry. This leads to the question, what next for the finance industry?
A recent survey on the changing trends in the finance industry has showed that there are some potential trends that could happen in the next year.
Growth in collaborations between corporations and startup companies
Traditional high street banks systems and infrastructure is archaic (some core systems and methods have remained virtually unchanged since the 1970’s). A system designed more than 40 years ago unsurprisingly has weaknesses, and these weakness have been exploited by fintech banking platforms such as Monzo and other disrupters, who are characterized by interoperability, modular system design, API management, and cloud computing (not to mention the eye grabbing coral pink cards that users trot all over the globe). So, what does this mean for the future of finance? Traditional High Street banks will either need to invest a heavily in their infrastructure and play catch up or embrace partnerships with fintech’s (i.e. the partnership between U.S. Bank and Socure, Credit Suisse and NoPassword) to bring banking into the 21st century.
The rise of artificial intelligence
The finance industry cannot continue to function without the help of technology; as technology is already ingrained in the industry and there is no way that they can be separated. Artificial intelligence and cybersecurity will be used widely in the industry in the next years to come.
Artificial intelligence would allow companies to automate some of their processes to reduce costs and increase efficiency (within the survey, it is stated within the past 12 months, the search for comprehensive algorithms and adoption of Artificial Intelligence have doubled within fintech programs worldwide). This allows for jobs to be automatically processed and done as soon as they come in. However, it would not be able to do all of the jobs in the finance industry and there is always a need for humans so it means that instead of having less jobs, there will be an increase in demand for software engineers and developers to run the systems from the back end.
The Rise of Cyber- Security
Banking was (and still very much is) a trust business. When people are depositing their whole life’s savings, it is critical that they trust the bank, and that the bank is worthy of their trust. Banks and other big institutions are constantly fighting cyber-attacks, the number of attacks across the UK has increased 10-fold in the last 4 years according to the UK's Financial Conduct Authority, and a third of these targeted financial institutions. With the rise of fintech’s without brick and motor stores and the rise, fall and rise again of Bitcoin (an online, crypto currency) all point to the idea that future is online and for any bank this means they need to invest in cybersecurity to protect their assets and customers.
Predicting the future is impossible, but that doesn’t mean that long term trends can’t be identified and prepared for. Collaborations, artificial intelligence, and cybersecurity are three trends that indicate the direction the future of banking is heading. The only certainty is uncertainty, but banks which are looking to the future would do well to watch these trends and be proactive rather than reactive.