These are the 5 Biggest Financial Services Technology Trends in 2022

Financial service companies have had a turbulent few years. Many have seen their traditional business models and working methods disrupted by the Covid-19 pandemic and the rapidly-changing technology landscape.

The next few years will prove even more crucial as we determine which businesses can adapt and thrive in this new environment.

These trends are driven by the increasing number of customers who expect to be able to access services immediately, anywhere and anytime via their smartphones. We are also seeing a huge increase in data generated by our digital lifestyles that are always-online.

Let’s now take a look at the top trends that will impact the industry over the next twelve months, starting with the established giants and ending with the most agile, small-scale startups.


Mobile banking

Today, there are more than six billion mobile phones worldwide. 66% of the world’s unbanked population owns mobile phones. These devices are a major target for banks and financial services that want to offer their services (literally) to customers.

As many people ditch the tradition of carrying around plastic wallets, they will make purchases through their phones more often. This is another way society is becoming more connected and digital. For most people, their phones are the main interface between the digital worlds and the real world. This is especially true in the financial sector, where every bank and insurer wants us to install their apps.

This is due to many factors, including customer experience (more below) and economic reasons. It’s usually cheaper for banks to offer service this way than having customers visit brick ‘n mortar branches (which are rapidly disappearing). The bank has an almost constant connection to us, which they can use to offer us tailored products and services, as well as to reduce fraud by using biometric security measures. Banks and insurers will be increasingly using chatbots, mobile banking, and cardless banking (including ATM withdrawals) throughout 2022. All of this will be available to us via our mobile phones.


Banking in cloud

While banks and financial service businesses had already begun to migrate to the cloud when the covid epidemic hit, the event was a major catalyst for cloud adoption. Cloud technology offers customers scalability and security, while also ensuring resilience and reliability. It is easier and cheaper than ever to start up projects using cloud technology, which can be based on the other breakthrough technologies listed in this list such as mobile, Blockchain and Artificial Intelligence (AI).

Multi-cloud infrastructure is where more than one cloud provider is used. Hybrid cloud, in which banks invest in a mix public and private clouds, is also well known and well-used in this sector. Accenture reports that 60% of its banking clients use more cloud providers than others and that over half of them have adopted a multicloud strategy. Cloud services are increasingly being seen as a way to help financial companies meet their environmental, governance, and governance (ESG), commitments. Many of the major providers have strong policies on sustainability, decarbonization, and other issues.


Machine learning and artificial intelligence

The financial services industry has been among the most enthusiastic early adopters AI. Its role in automating repetitive tasks, risk assessment and fraud prevention has been well documented. Covid-19 was a significant factor in the transformation of how we banked during the pandemic. As we move into 2022, there will be more cases of customers changing their behavior.

Established banks are now facing greater competition than ever before. Fintech startups, large retailers and tech giants such as Google, Amazon, and Apple all sign up customers for services that they would not normally be able to offer. All of these competitors have AI and smart, data driven technologies as a key tool. Traditional banks and insurance companies must adopt them if they want to remain competitive. These individuals have shown that they are capable of integrating these technologies into backend operations in order to create robotic process automations (RPA), capable of streamlining repetitive tasks. The challenge now is to make this work with more unpredictable jobs, such as creating custom packages or selling to customers.

IDC forecasts that between 2021-2025, the financial services sector will outspend retail in terms of AI spending. This is nearly 14% of the total $204 billion annually. Another area of growth is the use AI to ensure equitable and fair treatment credit applicants. These algorithms will be more efficient in identifying biases and will help ensure that everyone has equal access to credit funding.


Blockchain

Blockchains are databases. They are essentially just databases with a few unique characteristics. First, they can be distributed. This means that they can be stored on many computers without one person having full control. They are also encrypted. This means that they cannot be modified or updated except by those who have the cryptographic keys required. They are also governed by consensus. This means that changes to data can only be made when everyone involved agrees. They are disruptive to the financial industry which has traditionally been centralized and managed by banks owners and regulators like governments and national banks. These are potentially very beneficial as they can streamline infrastructure, reduce fraud, increase transparency, speed up core processes like settling and clearing transactions and increase security.

Since the beginning of this year, banks and other financial services have been testing and piloting blockchain technology. HSBC, Wells Fargo and Mastercard use blockchain technology to settle foreign currency trades. JP Morgan has also created its own cryptocurrency. AXA, the insurance giant, has also created a blockchain platform to pay customers whose flight is delayed.

It is likely that we will see more innovative uses of this transformative technology in 2022. Although initially it was limited to digital money and cryptocurrencies, the potential for financial services is evident.


Enhancing customer experience using technology

Financial services companies have successfully utilized all the above trends to automate back-office functions such as fraud detection and transaction processing. These technologies are now familiar to companies, and they will feel more confident in deploying them to solve customer problems.

In 2022, I see this as the place where there will be real growth and innovation. When combined, AI, cloud services and blockchain can be transformative in creating solutions that enhance the lives of customers. Bank apps are commonplace. They often offer great customer service and simply serve the primary purpose of allowing customers to access banking services from any location. During the pandemic, they were the most used channel by customers to interact with their banks. The race is on for service providers to be the best in leveraging the latest trends to improve customer experience. Many apps have built-in AI assistants. These assistants can help customers manage their money by automatically identifying spending patterns and suggesting ways to save. Personalization is another strong trend. This allows customers to be matched with the products and services they need. Not just what a financial service company wants them to buy. This is possible because a lender can pre-approve customers for loans without having to do a credit check. This allows them to offer a loan to the customer, not just an invitation to apply. Voice, such as chatbots and voice interfaces, is also high up on the must-have list.

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