The Busy Person’s Guide To Technology In Financial Services

Financial services is now a technology business.

The pace of change is somewhat disconcerting – perhaps even overwhelming – for those of us who are busy doing our jobs and unable, or unwilling, to dissect the minutiae of the tech press. So, for everyone’s benefit, we’ve boiled down the major technological trends that are changing the face of financial services.

Artificial intelligence and machine learning have been grabbing headlines by enabling firms to provide groundbreaking services to customers at scale. Financial institutions have been investing in AI for years and late adopters are beginning to catch up thanks to advances in big data, open-source software, cloud computing, and faster processing speeds.

Another technological breakthrough is blockchain, which increases the efficiency and security of information transfer by enabling institutions to store information on distributed ledgers. Blockchain is often misunderstood, but it’s really quite simple. It is essentially a decentralized ledger of transactions, meaning that once a transaction occurs, everyone in the network sees it. This has transformative implications for financial services, indeed, the entire capitalist system, increasing security whilst lowering transactions costs and facilitating cross-border trade. The long-term impact will be reduced friction and increased transparency across the global economy, unlocking billions of pounds in value.

So it should come as no surprise that nearly every major financial institution is working on blockchain technology in some capacity. R3 is a consortium of more than 70 of the world’s biggest financial institutions engaged in research and development of blockchain usage in the financial system. Many banks are hiring in-house developers, or backing incubators and accelerators that are home to blockchain start-ups. This is not necessarily a defensive move – blockchain promises huge commercial opportunities, too, allowing banks to slash costs and better scale their operations across jurisdictions.

The advent of robotic process automation (RPA) is also driving efficiency and reducing costs across capital markets. KPMG believes that in the next 15 years, 45-75% of existing offshore jobs in financial services will be performed by robots, translating into cost savings of 75% for firms that buy into the technology. The era of labour arbitrage is coming to an end and we can expect RPA to render offshoring obsolete in the coming years.

Underpinning all of these technologies, heightened and more advanced cyber-security ensures that banks can gather, store and share information without compromising clients and the broader financial system. Attacks continue to escalate and forward-thinking firms are beginning to leverage and link innovative cyber security tools, Big Data analytics, advanced authentication and biometrics. Indeed, investment in cyber security is increasing, up 14% in 2016.

We work in a globalised nexus of people, organisations and regulatory jurisdictions, and the rate of technological change is exponential – each advance fuels further advances. This makes it very difficult to predict how the industry will develop and grow over the coming years.

However, one thing is certain – change is coming. And while it is understandable for there to be a bit of trepidation as workflows are streamlined and job descriptions are amended, it is also important to remember that with every step technology takes, the customer experience continues to improve. This is true throughout financial services, from investment advice, to payments and transactions, through to capital markets activities. And the good thing is, that no matter what decade we’re in, serving our customers best will continue to be the key driver of success.


This article was created in association with Origin Markets, directly connecting dealers and issuers in the primary marketplace for the first time. 

Edward Playfair