The financial industry, just like many others, is being disrupted by technology. Some of the methods we used in the past may now be obsolete. In the next couple of years, we’ll have even more trends that shape our future. Today, everything is handled online, and most financial transactions are done through our mobile phones. According to Data Prot, more than three-quarters of Americans have used their phone to check their bank balance.
But mobile banking isn’t the only tech trend we’ll see over the next few years. Blockchain and Artificial Intelligence (AI) are two of the most notable evolving technologies that are already changing the financial industry today.
So let’s take a closer look at these in-demand trends that are transforming the future of finance.
There’s no doubt that cryptocurrencies have had a huge impact on the financial industry. They’ve become a decentralized way to store money and make transactions. However, what’s really changing the financial industry now is blockchain.
The concept of blockchain might seem complicated if you’ve never heard about it before, so we’ll try to explain it in simple words. Imagine that you share a database with someone. You cannot modify the database without the other person knowing because you share the same records.
Blockchain improves the issue of transaction transparency and makes the processes in the financial industry more open. Since both parties, the sender and receiver, share the same record and it gets updated once someone makes changes almost immediately, blockchain minimizes the risks of fraud. Besides, companies usually spend a lot of time on data validation, which is unnecessary with blockchain.
Some people think AI is a new thing. Others still believe it is the stuff of science fiction. The truth is that AI has been running in the background for over 60 years. In 1951, Christopher Strache created the first AI program and, since then, scientists have been developing AI projects.
Now, how is this linked to the financial industry? AI refers to the ability of machines to imitate our behavior. This way, AI-driven tools could assist the financial industry in improving security services and the overall financial industry.
Imagine a world with biometric ATMs that help users avoid financial fraud.
There’s nothing more tedious than having to go to the bank because you’re having a problem with your debit card or because you forgot your password. With biometric ATMs, not only will you be able to protect yourself from fraud, but you’ll also be able to withdraw your funds by simply using a fingerprint. Even though it sounds like something we usually see in sci-fi movies, it’s happening right now. Some countries like Japan, Nigeria, Brazil, China, and India are already using biometric ATMs.
Machine learning refers to the ability of devices to learn from experience. It deals with a lot of data by identifying patterns and trends within a dataset. Therefore, one of the best applications of machine learning in the financial industry is fraud identification.
By implementing machine learning algorithms, companies can detect fraudulent legal documents, spot errors within the financial data, and forecast trends in the industry. Today many companies are using machine learning to improve their financial system.
Another common application of machine learning in the financial industry is the robo-advisor trend. This consists of a digital financial advisor that works with machine learning algorithms. Hiring a human advisor would normally cost you a lot more and, besides, they are not as accurate as robo-advisors. Since the chatbots use machine learning technology, they have a higher level of accuracy. And also, they’re available every day, no matter what.
Machine learning, AI, and Blockchain are some of the most promising tech advances that are changing the financial industry. They’ve all already had a positive effect on the financial industry. Thanks to tech, not only can we enjoy advanced security, but financial operations have also become easier and more efficient.
In case you want to learn more about AI, machine learning, and how algorithms work read our previous article.
This is a co-authored article by Career Karma and Lumi Wallet.