GUEST OPINION: Technology has been changing the financial industry for a long time. Just think of the ATM. It’s been around since 1969.
But the rate at which new technologies are disrupting finance is accelerating. So much so that we have a new term for such technology: Fintech (short for financial technology).
If you want to learn about the latest fintech developments, you’ve come to the right place. In this article, we’ll go over the top technologies disrupting today’s finance industry. Here they are:
Artificial intelligence (AI) and machine learning (ML) are helping finance companies collect, organize, assess, and leverage millions of data points through automated algorithms.
For example, AI can help finance companies analyze user behaviour, manage risk, and detect and prevent fraud. It also allows for a better customer experience through software like chatbots and mobile banking apps.
AI and ML help fintech companies improve their product while saving them time and money.
Blockchain is a technology that allows companies to record transactions on a public ledger. Though it’s most known for powering cryptocurrencies like Bitcoin, blockchain can have many applications.
For example, it can help finance companies tokenize stocks, bonds, and other assets so that they can streamline online transactions. Blockchain eliminates the need for middlemen like brokers by providing a transaction environment that is both transparent and highly secure.
This makes blockchain applications relatively inexpensive to operate while providing real-time transaction data. In the finance world, these are huge wins.
Application programming interfaces (APIs) help different software communicate with each other. They’ve been around for decades, but the finance industry has only recently started harnessing their full power.
APIs create a bridge between financial institutions and other businesses, products, services, and consumers. For example, stock APIs allow online brokers to gain real-time information about the stock market. APIs also allow different businesses to connect with payment apps like PayPal.
Such API connections allow fintech companies to plug into more data and features to seamlessly extend their services and operations.
Big data refers to the analytics of giant data sets. The amount of data available to finance companies from transactions, withdrawals, credit reports, and more has grown rapidly in recent years.
Big data lets finance companies leverage that data. For example, it helps you analyze customer spending habits, assess security risks, and manage fraud.
Without big data analytics, all of these processes would take up too much time and energy for the average company to be successful.
Cloud computing is the on-demand delivery of IT resources over the internet. Many finance companies are moving their data to the cloud because it allows them to operate more efficiently.
For example, when you move your data to the cloud, you eliminate the need to run costly servers and other hardware. You also need fewer in-house IT staff.
Cloud providers typically provide their services on a pay-as-you-go pricing model, which means you can easily scale your cloud computing services up or down based on your needs.
Operating from the cloud also allows finance companies to let their employees work remotely from any device. This means fewer overhead costs by reducing office space and utility expenses.
Plus, cloud computing is highly secure as cloud providers ensure your data complies with all federal and global data security standards.
The internet of things (IoT) refers to the linking of electronic devices over the internet. Common applications include smart devices like security cameras you can operate from your phone or voice recognition devices like Amazon’s Alexa.
In the finance sector, IoT is improving mobile banking experiences and helping to automate financial transactions.
From 2022 to 2029, the global IoT market is expected to grow at a compound annual growth rate (CAGR) of 26.4% to reach a value of over $2.46 trillion by 2029, and a big part of that growth is driven by the finance industry.
Robotic process automation (RPAs) automate repetitive and labour-intensive business processes and tasks with software robots.
RPAs are becoming a must-have across all industries including finance. Why? They eliminate the need for as many human workers and free them up for more important assignments within the company.
This reduces your operational costs and helps increase the power of your workforce.
Final Takeaways
In the internet age, businesses can’t afford to avoid digital transformation. This is especially true in the finance industry where consumers expect quick and convenient banking.
That’s why every finance company needs to adopt innovative technologies now to survive future decades. Those who don’t will get left behind by the competition.
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