Financial technology or FinTech is booming and its potential has got a lot of people buzzing about it (and no, I am not talking about cryptocurrencies). The excitement surrounding the industry is justified as technologies like Artificial Intelligence (AI), the blockchain, and big data are on the cusp of transforming the way transactions are completed.
The growth of AI, in particular, has the potential to revolutionize the financial services industry as it helps enhance security and data protection, improve customer centricity, and ease the regularity burden via RegTech.
Blockchain also provides improved security from its distributed technology along with considerable cost savings. Big data software development, on the other hand, has helped provide better value for customers while helping financial firms make very astute actuarial decisions on a client’s risk profile.
So what can we expect to see over the next 12 months? Let’s take a look at some FinTech trends in 2018 that you should pay attention to.
AI Will Power FinTech
There are good reasons to believe that AI’s infiltration of financial services will intensify this year because techniques like Machine Learning (ML), fuzzy logic, and pattern recognition are already at the core of cyber security (that keeps financial data safe).
However, the power and complexity of AI will evolve considerably this year to stay a few steps ahead of bad actors who will continue to try and breach financial systems (remember they also have access to the same technology).
This will create something like an AI arms race which in turn will exponentially increase the demand for top AI tech talent. At the same time, it will also continue to drive the RegTech forward while mitigating risk and helping to avoid the next big crash.
This technology is also expected to play a role in some aspects of Operational Risk Management (ORM) that covers the following:
- Anti Money Laundering
- Conduct risk
- Counter Terrorist Financing
- Data protection
- Fraud detection
- Geopolitical issues
- IT infrastructure and operations
- Regulatory compliance
- Sanctions compliance
ML, pattern recognition, and fuzzy logic are already playing an important role in various aspects of ORM and this is expected to grow significantly over the next 12 months to help model risk across the enterprise.
In 2018, you can also expect the lines separating both AI, ML, and big data to blur and breed innovation while improving existing products and services.
For example, FinTech apps leverage ML to keep track of how people spend their money. This information can then be used to offer predictive advice on how they should manage their finances and what financial products they should use.
Last year was all about cryptocurrencies, this year will be all about blockchain. This is because distributed ledger technologies are gaining a greater foothold in traditional financial services.
This is evidenced by the following banks that have already signed up for the blockchain cash settlement project:
- Barclays (BARC.L)
- Credit Suisse (CSGN.S)
- Canadian Imperial Bank of Commerce (CM.TO)
- HSBC (HSBA.L)
- MUFG (8306.T)
- State Street (STT.N)
While the cryptocurrency world has been quite volatile and sketchy, the blockchain has been growing from strength to strength boosting speed, efficiency, and transparency with its public ledger.
In 2018, the financial markets that surround blockchain will mature and investors will be more experienced and knowledgeable to differentiate between speculative investments and real use cases.
For example, SBI Ripple Asia is already testing cross-border blockchain bank transfers between Japan and South Korea.
I think it’s safe to say that the blockchain is here to stay, I mean even Goldman Sachs called it the “new technology of trust.” According to their estimation, the blockchain has the potential to transform how we interact with the government, buy and sell things, and verify the authenticity of anything from organic vegetables to property titles.
With the Internet of Things also increasingly playing a role in FinTech, the amount of data that will be continuously generation will be huge (to say the least). This makes it necessary to develop AI frameworks that can store and analyze the data when needed.
For AI solution models, the quality and diversity of data sources will be key to deriving real value. This year, cross-domain data exchange will also become the norm to enable strong growth in solutions focused on aggregating and exchanging user data.
You can also expect the industry to concentrate on data breach prevention, data security, and data regulation to stay compliant and protected. But finding the right balance between data and the access it needs will become highly complex.
With all these FinTech trends, you expect to see a revolution like when the financial services industry was transformed with the adoption of computers in the 1980s.
With AI, blockchain, and big data in the driving seat, 2018 will certainly be a transformative year for traditional financial services providers.
Are you looking for a mobile application development provider like Intersog for your next FinTech app? Contact us now and find out how we can help you achieve your goals on time and on budget.