How IT Can Augment Financial Services?

The evolution of IT constantly reshapes how we work, live, communicate, and network. Especially in the financial sector, information technology unlocks new opportunities for businesses, enabling them to innovate and improve their operations and security. Technology has already proven to be a major role player in the growth of the financial sector. With the popularity of digital banking and Neobanking being examples, IT is growing by leaps and bounds in the financial industry. 

Integrating technology in financial services has many benefits, such as reduced errors and fraud, improved productivity, enhanced security, simplified planning, and more. Basically, it brings automation, accuracy, and access to real-time information that makes decision-making better and easier.

As per a recent Deloitte survey, companies that offer financial services are quickly moving towards harnessing AI, robotics, and blockchain technology within their systems to improve their services and gain efficiencies.

Information Technology (IT) has the potential to take financial services to the next level. Still, many financial companies have not integrated technology into their processes as they are unable to determine which technology to invest in and how to use it in their current processes. This article covers everything you need to know about the latest and emerging technologies that can play a major role in augmenting financial services and how to use them best to gain maximum advantages.

AI in finance uses techniques and machine learning algorithms that help analyze data, forecast, manage risk, detect fraud, improve customer services, and automate tasks. Banks and financial institutions use artificial intelligence (AI) and machine learning (ML) to create human mimics that help support customers 24/7 and engage them better. AI and ML help improve productivity, speed, accuracy, and efficiency within financial organizations.

Example: New York-based company Ocrolus provides document processing software powered by machine learning and human verification. This software can automate the process of analyzing financial documents like bank statements, tax documents, invoices, mortgage forms, etc., and determine the customer's loan eligibility. This helps financial institutions increase speed and maintain accuracy while analyzing financial documents.

Many threats of cybercrime and online scams prevail these days when it comes to online transactions. It requires implementing multiple cybersecurity practices like highly encrypted firewalls and multiple-user authentication to protect customer data and ensure secure transactions. Several times, it has been noticed that these measures have failed, resulting in frustrated customers. Many financial institutions use AR login methods to overcome this challenge, which requires facial recognition to verify the customer’s identity. Besides security, AR can also play an important role in data visualization, making it simple for users to identify key trends and upcoming problems that can be addressed before they occur.

Example: One of the best financial institutions - Westpac in New Zealand, has launched an app known as Westpac app, which allows customers to access reports in the form of 3D bar charts informing them about their transaction history, financial balances, and spending behaviors.

Blockchain is currently considered a major revolution, helping financial institutions and banks simplify operations, automate compliance, and accelerate settlements. As per Juniper Research, Blockchain deployments will allow banks to save around $27bn annually by 2030. 

Blockchain is a decentralized ledger used to make cross-border payments without the help of a central governing body. It uses cryptocurrencies like Bitcoins to facilitate transactions. Blockchain is also a highly secure way to record transactions and customer data and execute smart contracts. It has also powered decentralized finance, most commonly known as DeFi, which is a form of finance that removes intermediaries while providing financial services. 

Example: Singapore Exchange Limited - an investment holding company that provides financial trading services all over Asia, applies blockchain technology for online transactions, market trading, and building highly efficient interbank payment accounts. They have overcome several challenges pertaining to errors and fraud by automating the reconciliation process for all their financial transactions.

Cloud computing, also known as Software-as-a-Service (SaaS), is a term that refers to data storage over the Internet. It enables financial organizations to store their data and information over the Internet instead of on-premise servers. It offers several benefits to financial organizations, like quick access to information from anywhere, high-end security, and reduced costs. Due to security and regulatory compliance reasons, the financial sector has been slow in adopting cloud computing. However, after the COVID-19 pandemic, financial organizations started realizing the importance of cloud computing and how it helps satisfy customer needs and accomplish their business goals.

Example: The London Stock Exchange Group (LSEG) has partnered with Microsoft to build its data infrastructure using the Microsoft Cloud. This partnership has been done to develop new products and services for data and analytics. LSEG requires planning to invest $2.8 billion in cloud computing services within this 10-year contract period. The reason behind this is that cloud computing holds exponential opportunities for financial companies in terms of efficiency, productivity, and profitability.

IoT connects devices that share information, and carry out secure transactions. Companies offering financial services use this technology to automate their core processes, allowing quick and efficient data collection and accurate information processing. It also enables improvement in customer experience to a great extent due to its quick connectivity and processing capabilities. Besides that, IoT also helps in accessing clients’ real-time data, detect frauds, and identify any kind of irregularities in advance to prevent considerable financial losses.

Example: John Hancock - one of the most leading investment management companies extracts information from connected health gadgets like smartwatches and wearables to design insurance schemes. By analyzing this data, the company can come up with people’s sleeping patterns, and physical activities which then allows them to offer insurance policies that benefit insurance companies and policy holders both.

Robotic Process Automation (RPA) is used to complete repetitive tasks flawlessly with high speed and efficiency. RPA bots can automate tasks without any human intervention. When it comes to financial services, RPA can take over all the manual tasks, keep accounts on track, and maintain financial records flawlessly. Precisely, it saves time and efforts and at the same time improves accuracy in financial analytics and forecasting. Ultimately, RPA can improve crucial decision-making, customer services, and overall operations within financial organizations.

Example: Radius Financial Group is using RPA for all the tasks related to their mortgage loans. As their mortgage loan involves a time-consuming and lengthy paperwork and verification process, documentation was wasting a lot of their time. Also, a single mistake by an employee or client could cost them a lot and also delay the process. RPA helped them to reduce this processing time by 80%. By implementing RPA, Radius Financial Group has been successful in maintaining an error-free loan processing system in place, leading to higher efficiency and productivity. 

To summarize, below are some of benefits that IT has brought into the financial sector -

To survive in today’s cutthroat competition, embracing emerging technologies that prioritize speed, efficiency, and flawlessness within workflows and processes has become imperative. IT can help financial institutions and banks overcome underperformance, outdated methods, and rigid data structures. 

Also, it is important to understand that in this era of artificial intelligence and robotics, the expectations of stakeholders and customers are constantly changing. Thus, your financial organization must meet those demands by implementing the latest technological breakthroughs. Your IT strategy will not only meet the challenges of today but also make your business future-proof.

Financial organizations that implement advanced technology and futuristic approaches can achieve competitive positions in their respective niches. Suppose you are also looking for a perfect technology partner for your financial organization. Talk to our executive team to learn more.