Three Ways Fintech Is Redefining The Banking Industry
From Blockchain to EyePrint ID; Banking Will Never Be The Same Again
A new wave of innovative financial technology (fintech) is upending workflow and processes across every aspect of the financial services industry. Tasks once handled solely with paper money, bulky computers, and human interaction are now being completed entirely on digital interfaces and mobile apps. Almost every type of financial activity – from banking to payments and even wealth management – is being re-imagined by startups harnessing the power of disruptive technologies such as blockchain and AI, some of which have garnered blockbuster investments from tech luminaries like Bill Gates.
Ultimately, the banks that are able to identify ways to leverage technology to improve customer service, increase efficiency, simplify structures and operations, and make better use of their data, will benefit from the rise of digital and avoid obsolescence. With that in mind, we round up the three biggest fintech innovations poised to rock the banking industry in the very near future.
Blockchain Core Processing Systems
Due to the critical function that the banking industry provides, one of its hardest challenges involves ensuring that its technology is up-to-date. Mark Warrick, previously a software engineer at Deutsche Bank and RBS, told Business Insider; "banks can't deliver to their customers the innovations that you're seeing in other sectors simply because their fundamental core systems are not able to react." As such, many banks still run on old legacy core processing systems, resistant to test the waters with risky new technology.
However, it seems like the financial sector is finally awakening from its technological slumber and is starting to invest heavily in fintech with Asia leading the way. Since 2009, DBS has spent "almost a couple of billion dollars" on rebuilding its core banking systems and IT architecture, enabling nimbler operations and more responsive development of new applications, products and services. Last year, the bank was given the accolade of the world’s best digital bank by the finance magazine Euromoney. The magazine also named DBS as Asia’s best bank – the first time a Singapore banks has received the award, previously only won by the Asian operations of American and European banks.
Artificial Intelligence For Data Analytics And Stock Trading
With the advent of chatbots, robo-advisors, and cognitive computing, AI is fast becoming ubiquitous to the banking sector; redefining the way we bank, invest and get insured. Essentially, AI is the ability for machines to interact and learn to do tasks previously done by humans. Ray Kurzweil from Google estimates that AI will surpass human intelligence by 2019. With continual investment and development, AI will evolve from a buzzword to a critical capability to drive better outcomes for clients through more personalised advice, improving efficiency for banks, and solving talent shortfalls in banking advisory skills.
Among the various AI applications, it is interesting to note that numerous hedge funds across the globe are also investing in advanced systems to deploy AI models that continually learn by taking input from several sources of variation in financial markets and sentiments about the entity to make investment decisions on the fly. Previously a job reserved solely for human talent, reports claim that more than 70% of the trading today is carried out by automated AI systems. Most of these hedge funds follow different strategies for making high frequency trades (HFTs) as soon as they identify a trading opportunity based on the inputs.
Some of the more prominent hedge funds active in AI space are: Two Sigma, PDT Partners, DE Shaw, Winton Capital Management, Ketchum Trading, LLC, Citadel, Voleon, Vatic Labs, Cubist, Point72, Man AHL.
Eyeprint ID And Voice Authentication
Forget Iphone’s facial recognition, the latest game changing technology is eyeprint ID and voice recognition, touted to provide even greater accuracy in security authentication and enhance user experience. In 2016, Barclays and Citi were two major banks that launched voice authentication for call centres and phone banking, thus eliminating the tedious verification process during customer service calls.
Another promising unique biometric security technology is Eyeprinting that authenticates online transactions using pictures of the human eyeball. The Eyeprint ID for mobile login solution takes a photo of a user’s eye from the smartphone and examines the individual’s unique eye-vein patterns to create a digital key instead of a complex password. According to EyeVerify, a leading Eyeprint ID technology system provider, their technology is more than 99.99 percent accurate, making passwords a thing of the past.
Currently, over 50 financial institutions offer Eyeprint ID to over 50 million of their customers for convenient, secure authentication, including major leaders such as Yapi Kredi, Alipay, Wells Fargo, and numerous regional banks and credit unions.