Google Play icon

Technological Advancements in Finance: Brief Overview

Share
Posted June 3, 2019

It’s no secret that we live in an age where financial and technology sectors are growing hand in hand. This joint growth is often attributed to the fintech industry which is leveraging traditional banking services with technologies like artificial intelligence, blockchain, mobile services, etc.

While the new ways of providing financial services to the people are being created on a regular basis, we already have many practical solutions in the market. For instance, one of these which is also more of a quintessential example is robo advisor. It’s a mobile app that allows you to automate your investments with the help of a reliable and smart finance module but you can also create your own investment strategy in a “best of both worlds” kind of arrangement. There are many other apps like these that leverage new-age technologies to make financial inclusion a reality and making investment and personal finance easier.

Financial analysis - artistic impression. Image credit: Goumbik via Pixabay (Pixabay licence)

Financial analysis – artistic impression. Image credit: Goumbik via Pixabay (Pixabay licence)

The following are some of the ways modern technologies are taking the finance domain to the next level and equipping retail investors and general users with innovative tools that can help them maximize their investments and avail traditional banking services in a seamless manner:

Artificial Intelligence and Automation

Let’s start with a bold projection – the banking industry has an estimated $1 trillion USD riding on the surge of artificial intelligence. This is what experts at financial research firm Autonomous have to say, based on the insight that as smart devices are becoming prevalent across the globe, venture capital firms will invest up to $10 billion USD in AI-focused companies every year. So, this explains the potential, but what about the practical application? Let’s get into it.

Most banks have a massive customer base, which is why their full-time customer support executives can’t possibly handle all the requests they receive every day. This is why more and more of them are setting up chatbots on their websites and apps to process a good chunk of these requests, most of which are repetitive anyway. For instance, basic inquiries about interest rates, banking services, terms and conditions, etc. are already pretty much well-documented and easily understood by the bots. So, it’s not that of a challenge to program the bots to provide correct responses to the customers based on the inquiries.

AI is also used by financial institutions in risk management today, as a software program can easily monitor hundreds of thousands of transactions to identify suspicious/fraud entries and raise alarm. In the same way, claims can be processed much faster and with minimum losses as AI programs can verify the details of the events and release funds only if the information available at hand is enough to warrant the same.

Blockchain

Blockchain is certainly one of the most popular buzzwords in the fintech industry today. It’s touted as a secure, transparent, and faster payment solution compared to the traditional options.

The application of blockchain in the industry has been discussed time and again, and most of the leading financial institutions in the world are already building projects upon it. For instance, there was a blockchain trial recently which supported the idea of smarter or programmable money that can be used in budgeting, insurance pay-outs, and management of charities and trusts in the world.

One of the most realistic applications of blockchain in today’s banking sector is in KYC i.e. Know Your Customer (KYC) on which the financial institutions spend up to 500 million USD per year, according to a Thomson Reuters Survey. These institutions can save a lot of money by using blockchain which can carry independent verifications of different users on the central network. This way, once the verification process is completed with one bank or NBFC, then others can access the details of the same through the same network without having to start all over again.

Another major application of blockchain in the fintech industry is smart contracts. These can be used for high-value transactions and agreements in which security is of utmost importance. Here is how it works- a computer program is created in which the terms and conditions involving two parties are created. Once the conditions are met by both parties as per the contract, then a specific action can be taken by the program itself.

A good example of how smart contracts can be used is crowdfunding websites. Rather than the traditional format, if these websites use smart contracts, then the donations can be held in a secure account which doesn’t have a single owner and is also bound by an unbreachable code. The funds collected by the account can then be released by the program if the conditions given in the contract are successfully met by the project owners. In this way, there is no need for a third party and no risk of the organizers running away with the money without keeping their promises.

Conclusion

Technology has become more of lifeblood of the banking and finance industry. Its impact has been so substantial and widespread, that’s it’s nearly impossible to imagine one without the other. One thing’s for sure- banking services and personal finance are to become simpler, more secure and accurate with time as the emerging technologies will mature and be applied in the existing products across all facets of the industry.

Featured news from related categories:

Technology Org App
Google Play icon
83,357 science & technology articles

Most Popular Articles

  1. Bright Fireball Explodes Over Ontario, Meteorite Fragments Might Have Reached the Ground (August 5, 2019)
  2. Why older people smell the way they do? Japanese have even a special word for it (August 4, 2019)
  3. Terraforming the Surface of Mars with Silica Aerogel? (July 23, 2019)
  4. Moisturizers May Be Turning Your Skin Into ‘Swiss Cheese’ (3 days old)
  5. Swarm Autonomy Tested in Second Major DARPA OFFSET Field Experiment (August 8, 2019)

Follow us

Facebook   Twitter   Pinterest   Tumblr   RSS   Newsletter via Email