Technology became very much in demand in the 21st century. But not everyone is in demand in the main sectors of the economy. In this material, we’ll talk about which technologies are bringing new breath into the financial sector.
Cloud technology or «cloud» is a virtual storage where anyone can place files, use computing power or computer programs. In modern human life, the cloud is used to store various information: photos, videos, documents, etc. Now, given the kind of smart-phone cameras that we have now, the phone’s memory is often in short supply, which is why people use cloud storage.
If we look back a little bit, about 10 years, then the financial sector did not use cloud technology. There was a strong reason for this – a threat to the security of clients’ personal data and funds. Billions of people around the world use banking services, so the fears of the financial sector can be understood.
This is not the case today. The banking sector is an active user of cloud technology. An example of this that everyone knows is contactless payments from a smartphone. The data of the bank card is indicated by the person in the special software on the phone, then can pay them by simply going up to the terminal. All data about a bank card is uploaded to a special host system on a cloud storage, and then an emulated physical card is created. Data is not saved on the smartphone: at each payment, they are transmitted from the cloud in encrypted form.
Cloud technology is used by the banking sector because it has proven safe. It is not advantageous for banks to develop their own cloud vaults – it would make a separate branch to a completely different kind of activity, with huge costs.
Artificial intelligence and machine learning
Definitions that in 2010 we often heard only in films, and in 2021 people are already talking about it in the news and scientific materials. The use of artificial intelligence and machine learning in the financial sector began around 2013-2014. The British Financial Regulator (FCA) had banned fees for financial advisors. Many other regulators around the world have followed suit. Banks and financial institutions had to lay off financial advisers because their activities could no longer be monetized. However, questions from clients remained and something had to be done.
Artificial intelligence (AI) and machine learning (ML) came to the aid. If someone did not know, the voices you hear when calling the bank are AI and ML. It is worth noting here that, sooner or later, financial advisers would have been replaced by chat bots because they had a number of advantages:
- Banks will not have to pay a chatbot salary, it is enough once to create and adjust it. In the future, it will only be necessary to complement some of its possible functions, but this is not so costly.
- A chat bot operates 24/7, without breaks and weekends.
- From the available information about the customer, the bot can easily form an individual offer, which could have taken a long time for a financial consultant.
- At the same time, the bot can lead dozens or hundreds of clients, excluding the human factor.
Also, artificial intelligence is used in the analysis of financial markets, predicting a variety of possible scenarios. Money management, security system, audit-AI and ML are used everywhere.
PRA-solutions – automation of work processes by robots. As experience has shown, robotization is applicable in many economic sectors, but finance can be considered the most appropriate.
Statistically, in 2020, more than half of the processes in the financial sector were performed by robots. Take a mortgage expert, for example. About 90 percent of his working time is devoted to completing applications from clients, if done manually. And if you connect a robot to this process, this indicator is reduced to 60%, which allows the specialist to spend time on more important work tasks.
In 2021, robots can take on the following responsibilities:
- Processing incoming data. Bank workers around the world spend more than half their time on this. The use of robots in this process reduces the workload of employees by 60%.
- Validation of the data. The task is not difficult, but it is very time-consuming. If you give this task to a robot and give it access to databases, things will go a little faster.
- Information gathering. To form an individual proposal for the client, one must understand the mood of the markets and the state of affairs in general. While the analyst looks for all the information he needs, the offer may be out of date. So that’s why robots are now doing this in banks, because they are able to find the right information much faster and structure it correctly.
Blockchain and cryptocurrency went hand in hand for all those years, but in 2021, it’s safe to say that distributed registry technology was separated from digital assets, in terms of concepts.
Blockchain is a simple database that consists of blocks. Each block contains information that cannot be changed or deleted. In other words, once the information is in the blockchain, it stays there forever. In addition, blockchain has no centralization, that is, one data center – it is located on many servers or PCs around the world.
Inside the banking sphere, there’s a process called reconciliations. It’s about reconciling and reconciling data. Due to the human factor and the two-way exchange of information, reconnaissance takes quite a long time. Blockchain solves this problem by speeding up the whole process, as well as conducting transactions more quickly. Another benefit of using distributed registry technology by banks is the ability to forego multiple intermediaries during interbank transfers.
They’re the reason we pay such a large transfer fee.
At the end of 2020, senior financial experts estimated that the introduction of blockchain in banks only in the United States would reduce annual spending by $8 billion, with a total of $30 billion.
All of the above technologies are used by the financial sector but not yet on a large scale. In the next 10 years, each of them will become an integral part of financial companies, which is certainly a welcome development: the digitization process will accelerate worldwide, and we will be charged less money for using their services.
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