Technology trends have been shaping the financial services industry for a long time and it is noticeable that these new technologies are influencing long-term strategies. Mid-market financial services companies such as asset managers, hedge funds and insurance, should look to capitalise on new technology but should also keep one eye on potential risks. It is also prudent to look at how discreet areas of innovation could overlap to create further opportunities.
We take a look at some of the latest technology trends for mid-market financial services showing both the potential opportunities and importantly the associated risks.
The acceleration of AI
Artificial intelligence is accelerating fast and is creating a huge buzz across all markets at the moment, mainly due to a number of accessible AI tools that have been launched over the past 12 months to generate natural language, imagery and sound. Obvious use cases of AI are chatbots and robo- advisors that use natural language processing (NLP) technology to answer customer queries quickly and effectively, and robotic process automation (RPA) to manage repeatable and mundane tasks creating efficiency and reducing costs.
AI is also being used to collect business information to help make informed investment strategies. However, caution should be taken while systems are in their infancy and careful consideration should be made around how things could change based on higher adoption of AI technologies across the market, including key fundamentals such as ethics and privacy. It is important to understand that no system will be perfect, for example, ChatGPT release notes citing how the platform is prone to “hallucinations”.
Streamlining financial services processes
Blockchain and Distributed Ledger Technology (DLT) continue to rank highly as key trends within the financial services industry. Separate from cryptocurrency, blockchains and DLT are starting to be used to streamline processes such as trade settlements, clearing, and custody, whilst also increasing transparency and reducing the risk of fraud and are set to continue to feature in business models. Care should be taken to avoid hype and clear use cases should always be identified before embarking on blockchain and DLT transformation projects.
Technology advancement causing concern
We should also take some time to look at how current trends could be used negatively against your business. Lanware’s recent webinar on cloned attacks shows how sophisticated cyber criminals are cloning elements of your digital footprint to try to gain an advantage over your employees or clients. If you combine this practice with recent advancements in voice cloning, we could conceivably see sophisticated ‘bad actors’ calling up your clients, referencing a website very similar to your own or even using the cloned voice of one of your employees. In fact, Cyber-attacks are increasing at a drastic rate, with the latest reports showing a ~38% rise in global attacks in 2022.
Keeping safe in the Cloud
Finally, no trends article would be complete without mentioning Cloud Computing. This has been a hot topic for many years and will continue to be a driving force behind a lot of innovation within Financial Services. As your cloud exposure increases, always be sure to manage risk with appropriate cybersecurity services. All systems should be assessed for cyber risk and in all instances, be analysed and monitored carefully when looking at overall security posture.
Technology innovation is moving as fast as ever and there is a clear advantage to staying up to date with new trends. However careful consideration should be taken to ensure clear risk analysis, customer transparency and overall security of your organisation.