The 5 Biggest Financial Services Tech Trends In 2022 – Forbes
It’s been a tumultuous few years for financial service companies. Many of them have seen traditional models of working and business disrupted by the ongoing Covid-19 pandemic, the fast-changing technology landscape, and a new breed of agile, tech-driven startups.
If anything, the next few years will be even more critical, as we see which businesses are able to adapt to and thrive in this changing environment.
As well as the outbreak, strong drivers behind these trends include the ever-growing numbers of customers who expect to access services instantly, from anywhere via their smartphones. As well as the vast explosion in the amount associated with data we are generating thanks in order to our increasingly digital, always-online lifestyles.
So let’s take a look at some of the biggest trends that will be impacting the industry, from the incumbent giants to the smallest, most agile online companies, over the particular next 12 months.
There are over six billion mobile phones in the world today, and of the world’s 1 . 7 billion unbanked citizens, 66% own cell phone phones. This means that these devices are a key target with regard to banks and other financial services looking to put their own services into the hands (literally) of customers.
Increasingly, when we make purchases, it will become done through a phone – this is true both online plus offline, because many of us are ditching the habit associated with carrying plastic in our wallets in favor of mobile payment services. This is just one other way in which society is becoming ever more digital and connected, plus to most of us, our phones are the particular primary interface between the digital world and the real world. Nowhere is this more true than within finance, with every bank and insurance company keen for us to download and install their apps.
There are many reasons for this – through customer experience (more on this below) to economic reasons – it’s often far cheaper for banks to provide service this particular way than by having us come into bricks ‘n’ mortar branches (which, by the way, are usually rapidly disappearing ). And associated with course, getting an always-on connection in order to us that we carry in our own pockets everywhere we go gives all of them access to the wealth of data on our lifestyles plus behavior that can be used for numerous other purposes, from offering us tailor-made products and services to reducing fraud through biometric security measures. Throughout 2022 we will see banking institutions and insurers increasingly deploying chatbots, cardless banking (including ATM withdrawals), and personalized communications, and they will all come to us through the mobile phones.
Banking in the cloud
Banks plus financial services businesses were already migrating towards the cloud en masse when covid struck, but the pandemic was a huge accelerator of cloud uptake. This was due to the benefits this brings in order to scalability at a time when electronic services had been increasingly in demand simply by customers, as well as security and resilience. Cloud technology makes it simpler plus cheaper to spin up projects based on other breakthrough technologies mentioned in this list, such as mobile, blockchain , and artificial intelligence (AI) .
Multi-cloud infrastructure, where more than one cloud service provider is used, and also hybrid fog up, where banks invest within a mix of public and private cloud solutions, are both well understood and user inside the sector. According in order to Accenture, 60% of its banking clients use several impair provider, plus over half have adopted a multi-cloud strategy. Impair services are also progressively seen as a way for companies within the financial sector to meet their particular environmental, social, and governance (ESG) commitments, as several of the big providers have adopted robust policies on sustainability and decarbonization.
Artificial intelligence and machine learning
The monetary services field has also been one of the keenest early adopters associated with AI, where its role in the particular automation of repetitive processes, risk assessment, and scams prevention is well established. During the pandemic, almost fifty percent of all of us made significant changes in order to the way we bank due to Covid-19. This means that will once we go into 2022, we will see an increase in make use of cases around understanding plus responding to altering customer behavior.
Established banks face competition from more directions than ever before – with fintech startups, large retailers, and tech giants like Google, Amazon plus Apple all signing up customers to providers that would traditionally have been their domain. AI and smart, data-driven technologies are a key tool regarding all of those competitors, meaning that traditional banking institutions and insurance companies have no choice yet to adopt them themselves if they hope to stay in the game. They have frequently shown themselves to end up being quite capable of building these technologies into backend operations to create robotic process automations (RPA) capable associated with streamlining repetitive tasks. Now the challenge is in order to do this along with less predictable jobs this kind of as selling to individual clients or creating bespoke packages of services.
Worldwide, IDC predicts that the financial services industry will be second only to retail when it comes to spending on AI between 2021 and 2025, accounting for nearly 14% from the $204 billion that will be spent annually by the end of that period. One further area where growth will be apparent is the use of AI to ensure fair and equitable treatment of credit applicants. Algorithms will become a lot more efficient in determining exactly where bias is being applied in these processes, with the aim of ensuring that almost all segments associated with the population have fair access to lending plus business funding opportunities.
Blockchains are basically just databases that possess a few special characteristics; firstly, they are distributed, meaning they are stored across many different computers with no one person having overall control. Secondly, they may be encrypted, meaning they can only be altered or updated by people who have the cryptographic keys that will let all of them do so. Thirdly, these are governed by consensus, meaning changes to the data can only be made in case everyone with a say in the matter agrees that these people should be made. These characteristics mean these people are hugely disruptive towards the financial solutions industry, which traditionally has been centralized and ruled by the particular owners of the banks alongside regulators, such since governments and national banking institutions. They are also potentially hugely beneficial, offering the chance in order to streamline facilities while cutting fraud, producing transparency, speeding up core processes such as settling plus clearing transactions, and increasing security.
Banks and other finance have got been trialing and piloting blockchain projects for a few time now, and many have been put into general use. HSBC and Wells Fargo use the technology to settle foreign exchange trades ; Mastercard and Paypal allow payments upon their networks to become made using blockchain currencies (cryptocurrencies), as does J P Morgan, which has created its own cryptocurrency . And insurance giant AXA has created its very own blockchain platform to automate the procedure of paying out to customers whose flights are delayed .
In 2022 it’s inevitable we will certainly see more innovative make use of cases for this hugely transformational technology. While it was initially limited to cryptocurrencies plus digital money, its potential in economic services right now clearly reaches far beyond.
Improving customer experience with technology
We know that all of the styles mentioned above have been successfully used by financial services businesses to handle and streamline back-office functions like transaction processing and fraud detection. Now companies are comfortable with these systems; they will certainly increasingly feel confident implementing them to solve problems relating to their own most important asset – their clients.
This is where I be prepared to observe real growth and innovation in 2022. AI, fog up services, blockchain, and mobile are at their particular most transformative when pulled together to create solutions that improve the lives of shoppers. Banking apps are commonplace and usually aim to deliver a great experience simply by filling their primary function associated with giving customers entry to financial services through anywhere. In fact, during the pandemic, they will became the particular most popular channel intended for customers to engage with their banks. Right now the race is about between service providers looking to differentiate on their own on how effectively they can leverage the hottest trends in order to further improve the experience to get everyone. Numerous apps today come with built-in AI assistants that will can carry out tasks like helping clients manage their own money more effectively by classifying spending patterns and automatically suggesting where efficiencies could be made. Other strong sub-trends include personalization, where data is used to match customers precisely along with services and products that they actually need, rather compared to just the ones a financial services company wants to sell them. An example of this is when the lender is able to pre-approve a customer for a loan without carrying out a search that impacts their credit score record. This means they are usually able to go to that will customer with an offer of the loan, rather than just an invitation to make an application. Also high on the list of must-haves will be voice – as within voice interfaces and chatbots – which are reaching levels associated with sophistication exactly where they become truly useful.
Read more about these plus other future trends in my new book, Business Trends in Practice: The 25+ Trends That are Redefining Organizations .