Seven technology innovation trends in financial services

Amid a disruptive environment, innovation in financial services is picking up rapidly to meet changing customer expectations, improve internal operations or comply with regulations. Experts at Venturetec outline seven tech-driven innovation trends that are playing a dominant role in financial services’ innovation landscape.

Digital bank

Banks were already developing their digital platforms, and incumbent banks are now launching digital only iterations with no physical branches. A prime example here is Tencent-owned WeBank, which offers entirely digitalised banking services, and has replaced property guarantees with facial recognition technology and data analytics driven credit ratings.

Other examples include South Korean KakaoBank and Indonesian Jenius, which leverage simple and user-friendly interfaces to attract customers. As banks across the globe continue their drive towards cutting costs, fully digitalised offerings will be the logical next step for many.

Process automation

A key benefit to going digital is the scope to automate banking processes – another trend that is picking up momentum. Venturetec highlights Kyckr – a UK-based automated tool that accesses more than 180 company registries in real time to generate compliance-friendly Know Your Customer (KYC) data. The tool can ensure compliance, speed up the onboarding process, enhance customer experience and increase productivity by freeing up resources.

Another prime example is the use of automation in the IPO verification process. There are 127 steps to an informal IPO checklist, half of which are now completed automatically by Goldman Sachs using its Deal Link digital tool. Again, the tool frees up bankers to focus on other key tasks.

A third example that demonstrates the progress of AI is UBS Companion – a virtual avatar of any given firm’s chief investment officer that is available for a consultation at all times. The tool enables voice detection and even eye contact, facilitating a real time conversation with a client.

Blockchain

Blockchain was created to manage Bitcoin transactions. It refers to a distributed ledger that can be updated by multiple users in real time, with every transaction being recorded and clubbed into a block. The technology allows for a decentralised, reliable and transparent approach to record keeping, all of which are central considerations in financial services.

As a result, blockchain has been quick to gain popularity in the financial sphere, with many examples of creative applications. Venturetec points out DBS Bank from Singapore, which joined a global blockchain network of banks and digital solutions called Contour, with the specific objective of digitalising its entire credit settlement process. The Mitsubishi UFJ Financial Group, meanwhile, has developed a blockchain platform designed to process more than 1 million financial transactions per second.

Biometric Payment

The use of biometric technology to verify and secure financial transactions is also picking up. Designed to recognise physical features of users, biometric technology has significant applications in identity verification and payment authentication.

Online payments platform Alipay, for instance, is using fingerprint and even smile detection technology to authenticate payments. Japanese IT services giant Fujitsu has also developed a HandPay app in collaboration with Lotte Card, which uses palm recognition technology to verify payments.

Machine Learning

Machine learning is the capacity for automated technology to autonomously change its response based on user data and behaviour, thereby improving an algorithm or way of working. The technology has a spectrum of applications across healthcare and insurance, while banks rely heavily on customer experience to edge out competitors, making machine learning a key tool in the banker’s belt.

Outside of customer experience, Venturetec uses the example of ZestAI to point out how machine learning can be used to develop reliable credit data, driving greater diversification options for lenders. In other applications, JPMorgan uses its Emerging Opportunities Engine to inform its investment banking deals through predictive recommendations gained from automated financial and historical analysis.

Internet of Things

Also tearing through the world of financial services is Internet of Things technology. The technology enables integration of various digital devices without human intervention. Financial services institutions are using the technology to draw on a world of information.

For instance, AIA Vitality uses data from fitness trackers to offer discounts on annual insurance premiums if a user lives healthy. At the same time, Lloyd’s of London’s specialty underwriter Munich Re Syndicate is using sensor data to fine tune its weather forecasts in order to help clients gauge the impact of the weather on their operations.

Natural Language Processing

Natural Language Processing (NLP) – an iteration of voice detection technology – facilitates the control of machines using the human voice and language. Most financial services companies and insurers use NLP to manage customer service and interactions. Through a collaboration with IBM Watson, Deutsche Bank offers its clients procedural advice using a combination of AI and NLP.

Venturetec points out other examples such as Allstate, which has developed a voice assistant capable of processing and answering more than 25,000 customer queries per month.