Next-gen & security technologies for the financial sector
Two decades ago, new services and products emerged during the internet revolution, while others disappeared. Now, we are immersed in the digital age and another revolution is underway. This revolution will change the financial sector in Australia and worldwide more so than ever. The financial sector needs to adapt and respond to these changes rapidly, as some technologies, products and services that were new and helpful yesterday might be outdated tomorrow.
As a result of this rapid change, financial institutions need to be able to predict and understand the business challenges, trends and opportunities they will face tomorrow. Innovation and technology will be the tools to solve these obstacles and help the financial sector excel. However, before you implement any new technology, it’s always advisable to consult experts in the industry. Here are the next-gen technologies and secure developments for the finance sector to expect that you should understand to ensure that you are up to date.
Artificial intelligence (AI) and machine learning (ML)
You must have heard people saying that AI is the past, present and future. Yes, it’s true that AI is nothing new and has been trending over the past years. However, businesses are only just embracing it fully, as advancements in machine learning, robotic process automation and committed government initiatives make it more appealing.
As AI keeps on improving and becoming efficient, most businesses will adopt it in some way, and this will inevitably change how the financial sector operates. AI will create smart workflows that will grant the financial sector a competitive advantage by providing the right information at the appropriate time. AI technology will help the financial sector in the following ways:
Chatbots are increasingly becoming a preferred choice for many financial service providers for customer support services. Why? Chatbots in the financial sector are available 24/7 without extra staffing charges. Chatbots leverage the improvement of NLP (natural language processing) and ML algorithms to serve clients in all possible ways. A bonus? Chatbots are also great for improving customer engagement.
Many financial sectors are interested in AI-based customer intelligence. This helps the financial sector better understand its customers through their transactions and banking relationships by analysing AI data, providing opportunities for business growth and innovation.
Thanks to cloud technology and its many benefits, such as security, many financial service providers are moving to the cloud. Increasingly seen as a means for the financial sector to fulfil their ESG (environmental, social and governance) commitments, this technology brings more agility to Australian operations and gives workers the freedom to access financial and other systems. Cloud technology makes it simple and cheaper to spin up projects that use technologies like blockchain, AI and mobile.
Some of the standard cloud models include single, hybrid and multi-cloud. The multi-cloud model is where more than one service provider is used, while the hybrid is where financial institutions invest in a mix of private and public cloud services. These two are well understood and often used in the financial sector.
It’s essential to understand cloud technology and how it can impact the business. Try to avoid the mistake of implementing cloud programs and transformation processes without fully understanding how they will positively change your business.
Blockchain is one of the leading technologies in the finance sector, with the ability to minimise fraud by ensuring secure and quick transactions and trades. It can also help to minimise risk between the world’s interconnected financial systems. Blockchain technology achieves this by using advanced cryptography developed to resist hacking, thus making it more trusted.
There are infinite ways the financial sector can use blockchain technology, including keeping track of transactions and trades. It is worth learning more about how blockchain transforms the system and how you can gain and regulate exposure to this development.
Consumers have become very active online. In fact, according to recent research by Statista, the number of Australians using the internet is expected to exceed 23.3 million by 2025. This makes the digital world a breeding ground for scammers. Fortunately, with blockchain technology, this risk can be reduced, as money transfers and payments made on blockchain technology are more easily traced.
As information passes through different financial intermediaries, there is a high risk of interception, thus increasing the possibility of fraud. Blockchain technology is the solution to this issue as it uses cryptographic algorithms to secure exchanged information between parties by encrypting it. Encryption means that the information can only be updated or altered by the recipients who possess the cryptographic keys that give them access to the information. These kinds of transactions are also governed by consensus, meaning everyone with a say in the matter must agree for the information to change.
Blockchain technology can also make the financial sector more transparent as people complete activities on a public ledger. Transparency is important because it can expose inefficiencies such as fraud, resulting in problem-solving that can minimise risk for the financial sector.
Quantum computing technology can help streamline operations in the financial sector. The innovation of quantum computing might become a game-changer and is one to watch. Some financial service providers have started accessing the hardware necessary to develop the algorithms they will need. Some use cases of quantum algorithms in the financial sector include:
- Fraud detection
- Improved cybersecurity system and protection against attacks such as ransomware
- Portfolio analysis
- High-frequency trading
This is just some of the next-gen technologies to expect in the financial sector in years to come. However, the shift to digital channels in the financial sector isn’t smooth and these digital channels have increased the number of endpoints that have to be secured and attack surfaces. As a result, risk, security and compliance will continue to be major issues to monitor.