The financial sector has been slowly evolving amid a tidal wave of innovation brought by the technological revolution, which has taken every financial institution, bank, or investment firm by storm.
Consequently, the banking sphere has been infused with ‘Smart Finance’ in the form of smart technologies for enhancing operational efficiency, tailor-made user interface and retaining a niche position in the cut-throat digital environment. In this report, we examine the stride made by financial institutions to keep up with the latest technologies to beat the competition in the era of a fast-paced, digital world.
Learning from Online Gaming: Gamification and User Engagement
If the financial sector wants to learn how to design better programs and keep its users engaged, it should look no further than another tech-focused industry: the online games industry. Just look at how online casinos, in particular, embraced the latest tech to enhance transparency and security. Online casino games and offers adopted cryptocurrencies early on, have developed innovative tools that add new bonuses to typical slot games, and even reward players with NFTs rather than cash.
For the smart finance industry, taking notes on potential gamification opportunities could be important. Rather than learning from a dry book, imagine a gamified course using challenges and games as the instruction itself. For example, banks and other financial institutions could start to design gamified tools that help users set financial goals, track their progress and celebrate financial achievements when they hit their targets.
Big Data and Analytics: Unveiling Hidden Insights
Of course, financial institutions have always had access to gigantic piles of data – transactions, assets and liabilities, and market movements. So what’s new? What makes analysing this data – and making decisions based on it – suddenly possible? The answer lies in what are called ‘big data’ technologies. By tapping into massive computing power and applying sophisticated mathematics, institutions can now extract hidden patterns from their numbers, predict customer actions, and make more evidence-driven choices.
After putting your data to work, financial firms can tailor products and services to suit individuals’ needs and preferences. This can help people that need more support with their finances, or like to get a nice alert when they’ve overspent on their budget.
Artificial Intelligence: Redefining Financial Services
Artificial intelligence (AI) is transforming the processes and products of the financial industry. Financial services are being automated, decisions are being improved, and new ways of working are emerging.
- Chatbots and Virtual Assistants: the possibilities are endless today in areas such as customer support, where AI-independent agents can assist customers practically all the time, and the nature of the dialogue is constantly improving (from merely answering questions and handling low-level troubleshooting to ending up guiding customers step by step through their purchase decisions).
- Algorithmic Trading: AI algorithms can better analyse market data, identify trading opportunities, and automate trades with greater accuracy and speed than human traders, especially in high-frequency trading environments.
- Robo-advisors: Artificial intelligence (AI) platforms that provide automated investment management services. Robo-advisors use algorithms to assess your exchange-traded funds, recommended investments, and investment portfolio.
Cloud Computing: Scalability and Agility
Cloud computing provides the financial world with a secure, scalable place to store and access data, affording agility and resilience that are highly sought after. Cloud computing also allows real-time, virtual information sharing, tearing down any barriers between departments and locations.
This new storage solution reduces both the capital expenditure (on hardware and software) and operating expenditure (to pay for licensing, training, switching costs, etc). These cost savings can be reinvested to drive innovation and growth.
Blockchain: Transparency and Security
Blockchain is the technology that allows cryptocurrencies to function and is beginning to be applied to problems outside cryptocurrencies’ traditional ambit. This technology essentially provides a distributed public ledger that could transform financial transactions.
The benefit of blockchain is that it facilitates faster settlements. Existing financial transactions can take several days to clear. With blockchain, settlement can be almost instantaneous, improving efficiency and reducing costs. Blockchain also provides a decentralised record of transactions that may be shared with financial institutions and regulators to eliminate the possibility of fraud, facilitate the highly complex compliance process, and can be used to monitor suspicious activity.
Open Banking and APIs: Fostering Collaboration
A regulatory move known as open banking forces banks to share customer data securely in a way that cuts out middlemen – often rendering them obsolete: via APIs (application programming interfaces) that third-party financial service providers can access.
With open banking, for example, FinTech startups can use a bank’s existing customer-base and back-end IT infrastructure to provide new financial products and services, thereby benefiting both the institutions and consumers. Consumers get more financial products and services from multiple providers, increasing competition and, as a result, leading to more innovation and lower prices, and ultimately, more financial inclusion.
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