Ever since the humble abacus, the financial sector has been using increasingly impressive tools to help get the job done. Thankfully, these days, it’s more about digital technology than counters on a stick.
But the principle is the same; with the right tools, your financial services business can increase productivity and growth.
As we move into a new year and new decade, we thought we’d look at how tech is redefining the ever-changing financial sector.
4 ways digital technology is redefining the financial sector
1. The prevalence of artificial intelligence
Artificial Intelligence (AI) is slowly working its way into every aspect of society. In fact, it will most likely change life as we know it much sooner than you think.
Indeed, by 2037, seven million jobs will be lost to AI, according to PwC. But, on the flip side, AI will also create 7.2 million jobs.
This shift will affect most major industries, and not all positively.
Unfortunately, according to these statistics, AI will replace approximately 7-8 percent of financial services roles. This will likely change day-to-day tasks significantly within the industry.
PwC stated that the most valuable skills in this new AI-driven working environment will be ‘strong digital skills, creativity and teamwork’. So, to attract and retain the best talent in the new decade and beyond, you’ll need to adapt your hiring process to these core competences.
But, it’s not all bad news.
British finance businesses that use AI at scale perform 11.5 percent better than those that don’t. This is because they believe it will help them gain a competitive edge on the world stage. With results like this, we can almost guarantee that AI will become vital to the industry over the next decade. So, watch this space.
2. More information and insight than ever before
Softwares such as Sage, Xero and Power BI have given the finance industry unprecedented insight into both their clients and their own businesses. With the click of a button, you can create reports and generate insights that would have taken hours 20 years ago.
Not only that, but consumer insights gleaned from big data will become paramount to future competitiveness. After all, the finance industry generates a lot of data – credit card transactions, ATM withdrawals, credit scores – all of which can produce actionable insights for your business.
You can make business decisions in real time by examining:
- Customer spending habits
- Sales management
- Customer feedback analysis
- And much more…
With this data at your fingertips, your business can get accurate insights on consumer behaviour and, in turn, improve your services for the better.
3. The rise of banking alternatives
Unless you’ve been living under a rock, you’ll know that banking alternatives are now increasingly common.
In fact, digital-only banks like Monzo and Revolut are on track to treble the size of their customer base this year. This means more than 35 million people will turn away from the traditional banking system.
This shift has even prompted the Royal Bank of Scotland to create its own money-saving app, Bó. They realise that the financial industry moves fast, and if you don’t keep up it could be the end of your business.
Whether it’s banking, private equity or wealth management, throughout the industry technology is giving customers what they want – convenience, flexibility and insight into their finances.
So, if you want to keep your clients happy, perhaps it’s time to embrace digital technology in your business.
4. Increased cybersecurity risk
The number of data breaches reported to the UK Financial Conduct Authority increased by 480 percent in 2018
With bigger investments into digital technologies, the financial services industry puts itself at greater risk of facing cyberattacks than ever before. A terrifying thought!
But it’s no surprise the finance sector is a target for hackers. After all, your business is home to a lot of sensitive information which, in the wrong hands, could spell disaster for you and your clients.
This is why, to avoid punitive fines and reputational damage, you need to focus on maintaining effective cybersecurity and compliance with international data regulations, such as the GDPR, which will still apply in the UK after we leave the EU on January 31st 2020.
See the financial services industry clearly in 2020
It’s clear the financial services industry is changing rapidly. Whether it’s AI, data overload or cyberattacks, there’s always a new trend or threat to watch out for.
When it comes to future-proofing your finance business in 2020 and beyond, you shouldn’t make any big decisions until you know the latest and greatest that the industry has to offer.
Inform your strategy for 2020 with our ‘State of Financial Services 2020’ Report. It’s full of predictions, trends and events that you should look out for this year.