How to safeguard your firm against these 3 disruptive tech trends

With customer behaviors constantly evolving and regulations changing unexpectedly, even financial services firms that have not experienced significant disruptions need to be highly vigilant. They should be aware of various complex trends, such as the increasing use of mobile apps, artificial intelligence, virtual and augmented reality, gamification and cloud computing. 

How can financial services firms sift through the hype and identify and prioritize the real business challenges while also "future-proofing" their business against the inevitable disruptions to come? Here are three particularly disruptive trends financial services organizations should zero in on immediately, and how we see the industry reacting to them in the short- medium- and long-term time frames.

Changing customer demand
As financial services customers increasingly embrace all the advanced technologies available to them, their expectations have shifted accordingly. Customers have come to expect seamless, intuitive experiences in all digital interactions with their trusted partners and brands. How can financial services firms evolve to meet these demands?

Short term: Financial services firms will continue to embrace empathy-led design frameworks, in order to formally prioritize user experience to deliver optimal accessibility. Under these frameworks, firms frequently solicit customer feedback on their mobile apps and websites to assess navigability and intuitiveness. This client feedback enables firms to enhance the digital experience of their customers more effectively.

Medium term: In one to two years, AI-powered virtual assistants will dominate the financial services market. Expertly suited to handle routine but time-consuming office tasks like scheduling account review meetings and answering clients' routine questions, AI chatbots will free up time for humans to grow their client portfolios. Through reduced wait times and lightning-fast information retrieval, AI chatbots will meet customers' needs and let them quickly get on with their day. 

Long term: Beyond two years, more financial services firms will adopt open APIs (application programming interfaces), which will offer superior customer experience by integrating with third-party providers and products. These APIs let financial services firms access and share information from other banking institutions and loan providers, saving customers time and maximizing their use of data, for example, so that they know their clients better and can offer more customized services. System architects should look to open APIs to build more customer-centric functionalities. 

Empathy-led design frameworks, AI-powered virtual assistants and open APIs will all help financial services firms better serve their clientele and secure their business for the long haul. For now, the challenge is achieving widespread acceptance from firms to embrace the technology and digital transformation as it becomes crucial in meeting the needs of today's customers.

Digital transformation
Digital transformation is not a new concept, but in recent years it has proven to be an absolute must for any business hoping to drive lasting success. Financial services firms are embracing advanced technology to improve their internal processes and sharpen capabilities for their customers.

Short term: Financial services firms are increasingly turning to advanced technology like cloud computing and automation to support infrastructure optimization. Firms can ensure their system architectures are prepared to handle rapidly shifting server needs through dynamic scaling, which flexes up or down to accommodate real-time demand. Infrastructure optimization also benefits workload management. The more effectively financial services firms can organize their back-end operations, the better they can serve clients.

Medium term: As financial services firms look to digitalize their entire organization, they can augment their security through cloud-based disaster recovery planning. With a cloud server acting as a comprehensive backup, firms can reduce both monetary losses and operational downtime. Many cloud disaster recovery packages offer flexible security testing for vulnerabilities, failover assistance to backup systems, server cooling and physical security of hardware and personnel. On-demand (i.e., consumption) pricing ensures firms never pay for more than they need.

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Long term: Just as customer data can be leveraged beneficially, it can also be exploited by malicious actors. Within two years, we'll see financial services firms formalize their security through data privacy frameworks. These frameworks bring the entire organization together through comprehensive risk assessments and consultations with both regulators and security experts. As data threats become more sophisticated and customers increasingly prioritize their security, firms must ensure they do everything in their power to implement formal, robust protections.

Through infrastructure optimization, cloud-based disaster recovery planning and data privacy frameworks, firms can dramatically up-level their efficiency, reliability, and overall operations.

Regulation
Financial services is a heavily regulated industry, but today's technology can help firms improve their transparency, bolster crucial protections and keep compliant.

Short term: Modern firms are leveraging advanced technology like AI, machine learning and robotic process automation to perform automated transaction reconciliation for more accurate, efficient and compliant data processing. Trade reconciliation requires aligning data across multiple systems within an institution, and its susceptibility to human error makes it a potential regulatory risk. By using advanced software to automate the process, firms vastly reduce the error rate and free up valuable time for humans.

Medium term: Financial services organizations are required to adhere to anti-money laundering regulations — and rightly so. But as firms increasingly generate and rely on data, they become ever more susceptible to threats. This is where AML-as-a-service comes into play. Firms can protect their customers while leveraging key benefits of an SaaS solution: data analysis, cost-effectiveness, subscription-based pricing, real-time monitoring and scalability. Deploying AML into the cloud (versus an on-premise solution managed by a firm's IT team) will help financial services firms better serve clients and adhere to regulatory requirements.

Long term: Many firms still rely on manual processes and oversight for key initiatives like corporate governance, but leveraging AI/machine learning and real-time analytics automates processes, identifies potential risks and boosts efficiency. Firms can reduce review cycles from weeks to mere seconds and can give their compliance processes a much-needed refresh.

Automated transaction reconciliation, AML-as-a-service and corporate governance intelligence will all help financial services firms make their business nimbler and more adaptable in a complex regulatory environment. 

The precipitous learning curve of many of these emerging technologies may seem daunting to financial services firms, and some technologies — AI comes to mind — come with risks. Yet firms also understand the need to gain a better understanding of how these technologies can propel their business forward and bring about operational resilience. When deciding on how to embrace these emerging technologies, firms can't go wrong by prioritizing client needs. By pacing themselves and advancing thoughtfully, financial services firms can ensure they set their organizations up for lasting growth.