There can be no doubt that digital technology has transformed every aspect of our lives, from how we shop and work to how we travel and communicate. Few industries have made it this far into the 21st century without seeing dramatic changes due to advances in digital technology.
The field of finance is no exception. Over the last decade, banks and financial institutions of every kind have seen major disruptions in the way they do business — and those changes will only become more prominent as time goes on. Here are some of the ways technology will transform finance in the year 2020 and beyond, and what your business can do to be ready for them.
While not every financial institution has been quick to adopt cloud computing, more and more businesses have come to realize the benefits of moving features to the cloud. The global cloud computing market stands to grow dramatically in 2020.
What make cloud computing so beneficial?
· Security. More traditional IT infrastructures have an unfortunate tendency to be vulnerable to cyberattacks. With cybersecurity risks constantly on the rise, trusting certain functions to a security-conscious cloud service just makes sense.
· Mobility. Moving vital resources to the cloud frees up employees to move around rather than being tied to the office. Communications, analysis, and monitoring can happen on the go, which means more productivity.
· Storage. It’s no secret the field of finance generates tremendous amounts of data. Sourcing the storage of that data to the cloud means less of a burden on the IT department and less time and money devoted to maintenance and upgrades.
· Scalability. Spikes in usage due to unforseen circumstances can sometimes bring business technology to a halt. The superior flexibility of cloud computing means easier scaling of resources to deal with sudden changes — meaning fewer problems and happier customers.
The increased role of AI and automation in finance means changing roles for traditional roles like accounting. As virtual assistants and AI grow more sophisticated and automation of processes commonly performed by humans grows more prominent, digital and human laborers must learn to work side-by-side. Though some fear existing finance jobs might be eliminated by automation, statistics show jobs for financial analysts are growing steadily. Rather than being eliminated outright, skilled financial workers with the savvy to adapt will see their jobs become more sophisticated and strategic in nature. Technical skills such as literacy with financial software packages will become more important than ever.
Businesses of every stripe are using big data to anticipate customer needs, predict customer behavior, prevent fraud, analyze risks, and glean useful real-time analytics from the mountains of data produced on a daily basis. The financial world is no exception to this changing data landscape. To stay competitive, tomorrow’s businesses will need a comprehensive data strategy and a platform to securely handle their data needs.
Of all the technologies to impact the financial world in the 21st century, blockchain is poised to be one of the most disruptive. Originally developed to power cryptocurrency such as Bitcoin, blockchain allows financial assets of all sorts to be moved and stored privately and securely, peer to peer, without the need for intermediary agencies.
What does this mean for financial institutions? Blockchain-based applications could save companies millions in fees and overhead by eliminating the need for costly intermediaries. Companies can also use blockchain to streamline their processes and reduce risks. For these reasons, many are already investing heavily in blockchain solutions.
As a new and emerging technology, Blockchain is still poorly understood by many, and its disruptive paradigm of decentralized and transparent information may take some getting used to. Smart financial institutions stand to reap tremendous benefits from being on the leading edge of this technology.
Preparing for 2020 and Beyond
So what can you do to be ready for the changes technology will bring to the finance field?
· Adapt to new technology. To keep pace with the coming changes, it may be time to put aside some of your long-standing assumptions about your IT needs. Many companies are moving from traditional mainframe setups to adopt cloud services, AI, increased automation, big data, and the “internet of things.”
· Increase cybersecurity. Just as your legacy technology may no longer be up to par, it might also be time to do an audit of your existing cybersecurity procedures and give them an update as well. Smaller firms in particular are under increased attack from hackers and scammers, though larger institutions are no exception.
· Think of the customers. As customers grow more sophisticated and discriminating, it’s not enough for businesses to offer the same service they did in the 20th century and hope for the best. Today’s customers demand more, and customer intelligence will be a key element of any financial institution’s success going forward. Technologies such as live chat, virtual assistants, live website analytics, and accurate metrics will become more important than ever to maintaining customer loyalty and growth.