With technological advances on the rise in all industries, it’s hardly surprising that it’s having big impacts within the financial service industry. Digital methods have now become the mainstream in our generation in order to make business processes easy. Within the financial services industry, we can now see the development of the front to back investment management platform, as well as more polished data analytics. However, is technology doing more harm than good in the financial service industry?
Emergence of Blockchain
Since Bitcoin was placed on the scene in 2008, cryptocurrencies have been slowly taking over the financial services industry. The majority of major banks and start-ups have been conducting in depth research into blockchain and its effect on our financial markets. By using blockchain technology, costs of several financial activities could be lowered considerably. For larger banks in particular, this technology could have a dramatic effect, as they are currently facing increased operating costs. Furthermore, the use of blockchain in the financial service industry could disintermediate many financial processes, and this could have an effect on jobs. With blockchain in charge of transactional methods, those working in the financial service industry might no longer be needed.
Issues With Cyber-Security
Before technology began disrupting the financial service industry, cyber-security was still a large threat to many financial organisations. Now that technology is merging even more with finance, cyber threats are going to be on the rise. In 2016, a survey was conducted to find out how CEO’s of financial service companies felt. It was found that 69% of executives were extremely concerned about cyber threats. Whilst rapidly evolving technology seems like an advantage, it will mean that the majority of financial processes will be carried out digitally. This is an issue as it grants even more access to private financial data for hackers, so we need to carefully monitor the disruption of technology.
Revenue & Profitability Will Rely on Customer Intelligence
With technology playing a part in financial services, it means that we can gather more information about our consumers, including what they do and what they want. Therefore, after studying their data analytics, organisations can gain a better understanding on how to effectively reach their consumers and cater to their needs. Before this emergence, customer intelligence was based on simple heuristics, with feedback methods such as surveys and focus groups used in order to gather this information. The problem with this is that self-report methods aren’t always reliable, and you could never gather information about every consumer that way. Therefore, there are several positive points about technology disrupting the financial service industry.
AI and Robotics
Whilst this will take an extremely long time to be properly enforced into the financial service industry, robotics and AI are slowly making their way up the ladder. Alliances are already being made, with robotics and AI being used to address key pressure point and reduce costs in financial services. In order to make them more compatible with consumers, however, the focus is now on social and emotional intelligence within robots. Robotics and AI will be able to perform jobs simply and effectively, but we have the same problem once again of jobs being cut. Whilst technology is clearly helping the financial services industry, this disruption means that we are losing the importance of a humanistic atmosphere. No matter how advanced technology becomes, nothing will ever come close to proper human interaction, which is something that consumers value highly.