Disruptive Technologies Redefining the Financial Services Industry

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It has been five years since the revolutionary introduction of Fintech (Financial Technology), yet with the given signs of impeccable growth in the last five years, it is safe to say that this collaboration of IT with Finance Industry and its operations is likely to shape the future of the Finance Industry. Not long ago cash was seen as the only means for making transactions, but in recent years consumers have shifted to other Digital Alternatives, such as Unified Payments Interface (UPI). Government policies and Government decisions (majorly demonetization and the Digital India Campaign) have also played a major role in success of these cash alternatives.

UPI since its introduction has been witnessing growth year on year, with not only being a means for local audience but also a major game changer for the multinational companies such as Google (introduced UPI in the name of Google Pay). Thus, it is quite clear through growth patterns that technology is likely to play a major role in coming years in the Finance Department of companies while influencing Finance Industry as a whole.

But the real challenge is to predict the technologies to be adopted by the companies in the near future so as to have a competitive edge as well as first mover advantage. Technologies that are redefining finance department in 2019 are as follow:

Artificial Intelligence

AI is one of the transformative technologies ruling the given era of digitalization. According to a report EY mint on Emerging Technologies, investment in AI start-ups in India has grown to US$ 73 Million in 2017 from US$ 44 million in 2016, also with 400 start-ups working on AI, India had the third largest number of AI startups among G-20 nations in 2016. In recent years, deployment of Artificial Intelligence has been witnessed the applicability of chat-bots for customer service used by private banks such as HDFC and ICICI or AI used for reconciliation of accounts used by Punjab National Bank.

Robotic Process Automation (RPA)

RPA is nothing but simply an addition to Artificial intelligence, RPA can be considered intelligent automation across various business operations. It not only helps in reducing cost but also helps improve efficiency and service levels and data quality. RPA is used by finance teams to reconciliation, cash forecasting and credit and loan origination.

Thus, Artificial Intelligence and Robotic Process Automation are largely helping Finance teams in Financial Planning and Analysis.

Blockchain

Blockchain has been successful in attracting a handful of start-up founders and various private equity firms at large due to its potential to reduce financial services industry infrastructure cost, since the costs involved in confirming the authenticity of transactions is removed since blockchain provides a network wherein consensus is provided by everyone on the network simultaneous hence reducing the need for intermediaries and there cost thereby. Another reason that is likely to make blockchain technology grow like anything in the coming future years is the number of potential users, probably limitless.

Blockchain uses cryptocurrency as a medium to store monetary units similar to US dollar and Indian INR. Hence, in the near future Finance teams could use this technology more in their department to enable faster and cheaper settlements that could help save billions from transaction costs moreover providing transparency.

Instant Payments

Technology has changed consumer and business expectations in payments. Instant payment options are available in many markets despite the lack of immediate payment infrastructures. In some countries, banks offering alternatives to immediate payments actively market apps to their own customers, and in some countries banks even partner together to offer an immediate P2P payment experience to a wider customer base.

The availability of an instant payments platform offers banks an enticing opportunity to achieve the transaction speed consumers expect of their banking experience and increase customer satisfaction. With instant payments, more transactions will be made digitally instead of in cash, which means that payments will become less expensive and more user-friendly. Finally, by expanding and combining instant capabilities with solutions in e- and m-commerce banks and credit unions could develop an innovative portfolio of new services.

Prescriptive Security

The nature and incidence of cyber risk is unique and changing without notice, meaning that typical approaches to risk management may not be appropriate. The potential sources of cyber threats and the attack footprint are impossible to eliminate, requiring organizations to be nimble in their approach to cybersecurity.

More and more, advanced analytics, real-time monitoring, AI and other tools are used to detect potential threats and stop them before they strike. In the short-term, digital disruption may result in new risks and increased instability in the financial system, but in the long term, prescriptive security may improve its effectiveness.

 

 

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