If there is one sector that is driven by cutting-edge technologies the most, it is the financial services industry. These technologies are reshaping the financial services landscape, allowing institutions to offer ever-evolving and improved secure and simple services. New technologies also provide opportunities to grow the business and attract new customers with increased customer engagement. From AI and machine learning to decentralized finance and blockchain technology, these technologies promise a brighter future for fintech startups and financial companies worldwide. Let’s explore the key technological trends fueling growth in the financial services sector and how they’re reshaping the global finance landscape.
Financial sectors influenced the most
Innovations in finance are most crucial for the financial trading industry, where traders try to access financial exchanges. Technological innovations like advanced trading platforms and tools have driven this sector for decades. This fast-paced world of finance has been embracing innovation through offering advanced platforms that are more secure, transparent, and efficient. These platforms were designed to make the life of a retail trader easier, and all brokers try to adopt and offer them to their customers. The most popular advanced platforms for these purposes are MT4, MT5, and cTrader, allowing traders to access markets, trade, and analyze prices of assets with advanced tools and plugins. For retail traders starting out their financial trading journey, this MT4 compared to MT5 and cTrader offers a good source of information on which to select and why. These platforms are soon expected to integrate AI and machine learning components to make it even easier for traders to analyze markets and be effective. However, it is not only the financial trading sector that benefited from rapid technological advancements lately other sectors like online banking, exchanges, and payment providers also adopted many innovations.
Artificial intelligence (AI) and machine learning (ML)
Artificial intelligence (AI), especially advanced neural network models including deep learning, are reshaping not only the financial sector but also the whole global economy. Machine learning and AI are at the forefront of the financial revolution in services, and more and more companies are starting to integrate ML and AI to provide seamless user experience and cost-effective solutions. Advanced ML algorithms can analyze large quantities of data to detect patterns and provide personalized financial advice to customers. The most popular type of AI technology adopted massively is AI-powered chatbots, where these bots can answer most of the questions without explicit programming. This is because AI algorithms can analyze data, learn, and interpret information without the need to program them for each question and answer. Chatbots powered by AI provide almost instant responses with accurate information about the company’s services, and ML algorithms can detect fraudulent activities and even predict which direction markets will take. For businesses in the financial sector, these AI-powered solutions offer cost-effective and innovative solutions that can be integrated into their existing platforms without significant upgrades.
Blockchain and distributed ledger technology (DLT)
The blockchain technology that powers all the cryptocurrencies revolutionized the financial world. Decentralized ledger technology allows for transparent and secure recording of financial transactions. Transactions in the blockchain network can be conducted without intermediaries, making it fast, safe, and transparent. Services that were costly and lengthy before this revolution became accessible to a larger audience. This is especially true for cross-border transactions, where blockchain can transact money and value in mere minutes, while banks and other transfers sometimes take days and are costly. Cryptocurrencies like BTC and ETH offer users the ability to store and exchange value while being super secure at the same time. Surely, blockchain technology has far more capabilities than just transacting money online, and many financial companies adopted this technology to improve their services and transparency. The decentralized nature of blockchain reduces fraud but creates new threats for users as more and more cyberattacks target personal devices where private keys might be stored.
Cloud computing and Robotic Process Automation (RPA)
Cloud computing allows companies in the financial services sector to store vast amounts of data on the cloud and process it using powerful computers. With Cloud computing, companies can outsource costly computer equipment, to reduce costs. Businesses can now access much more powerful computers to analyze vast amounts of data at much lower expenses on demand, increasing their flexibility and capabilities. Wisely used, cloud computing allows companies to analyze large data from social media, market data, and transaction records. The results could be used to gain insights into customer behavior and market trends to detect potential risks.
RPA or Robotic Process Automation allows companies to automate repetitive tasks using software robots. RPA allows companies to replace their working force with software and redirect human resources to more value-added tasks for the business. Tasks replaced by RPA include data entry, transaction processing, compliance reporting, and sometimes even execution of trading strategies.
