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Can technology trends be utilized to influence the financial market through investments?
Technological advancements have had a considerable impact across various industries, altering the operational methods of companies.
Banks and investment institutions, like other industries, were also affected by this shift, and quickly adopted new technological solutions in their operations.
A study carried out by FEBRABAN (2020) revealed that banks raised technology investments by 48%.
During the COVID-19 pandemic, 74% of transactions by individual customers were conducted through digital channels.
Financial institutions are delving into new technological frontiers like artificial intelligence to enhance customer experience and introduce innovative service approaches.
This advancement created opportunities and sparked the emergence of a completely new financial industry known as fintechs, or financial technology.
A company should now think about how to take advantage of cutting-edge technology to effectively compete in the digital era.
In this article, we present five key technology and investment trends shaping the financial market.
5 developments in technology and investments that will impact the financial market
Fintech industry
The era of dominance by major investment banks in the financial services industry may be drawing to a close as fintech firms are transforming how the sector operates. Fintech encompasses technologies that enhance, streamline, analyze, or challenge conventional financial services.
A worldwide study on financial technology by PwC highlighted two important aspects:
- 28% of banking sector profits and payments are in danger due to fintech companies’ disruption.
- 81% of investment bank CEOs are worried about growing disruptions ahead.
Fintech companies have recently appeared, providing customers with innovative ways to handle their finances and transactions, as well as helping businesses optimize financial processes and reduce unnecessary costs.
Before these companies appeared, large financial institutions controlled these sources of income. However, they are now encountering new competition from smaller companies that specialize in certain products and services within the industry.
The rise of investment fintechs has positively impacted the banking industry, resulting in a growth in collaborations between investment banks and external fintech companies.
Learn more about fintech companies, their definition, and the way they are transforming the industry.
Blockchain technology refers to a decentralized digital ledger system.
Since Bitcoin became a feasible currency option for numerous investors, albeit with volatility, blockchain technology has gained popularity.
The financial industry is currently seeing a rise in the use of blockchain technology, which could lead to decreased costs and improved security.
Banks and other companies have implemented blockchain technology for two particular purposes:
- To eliminate middlemen in money transfers in order to lower expenses.
- To enhance transaction security through an examination of the fundamental aspects of blockchain technology.
Blockchain security offers the advantage of minimizing risk, eradicating fraud, and providing transparency effectively across various applications.
Discover more in this article that details the concept of blockchain and its operational mechanics.
AI refers to Artificial Intelligence.
A recent study by PricewaterhouseCooper indicates that despite being traditionally hesitant to adopt new technologies, many decision makers in the banking and financial services sector are now making investments in artificial intelligence (AI).
52% of executives stated they are making substantial investments in AI, with 72% seeing it as a competitive edge, as per the survey.
Financial institutions utilize artificial intelligence mainly through chatbots and robots to enhance customer service and make it more efficient.
AI is utilized to enable mobile banking for customers, providing round-the-clock access to banking services.
Financial institutions rely on AI to enhance security measures and combat fraud effectively.
Technology is essential for financial institutions to manage risks, make loan decisions, and enable the functionality of other technologies like Big Data analytics, robotic process automation, and voice interfaces.
Big Data – Text #4
One method to gauge the impact of a technology on a sector is to monitor the sector’s investments in it.
The banking industry is currently one of the top investors in Big Data and Business Analytics solutions, as reported by IDC’s Big Data and Analytics Spending.
The financial industry produces a significant volume of data through activities like credit card transactions and ATM withdrawals. Utilizing this data effectively for decision-making and deriving valuable insights will be crucial for maintaining competitiveness in the future.
Financial institutions have the opportunity to gain further insights by utilizing Big Data.
- Interacting with clients and making immediate business choices.
- a client’s purchasing patterns;
- sales administration;
- Customer segmentation for marketing optimization.
- Sales generated from cross-selling.
- Fraud control.
- Risk evaluation and disclosure.
- Analysis of customer feedback.
Big Data analysis assists in recognizing market trends and enables financial institutions to enhance internal operations and mitigate risks.
Five. LGPD
The General Data Protection Act (LGPD) of Brazil provides much-needed clarity to the country’s legal system by aiming to consolidate and update various regulations governing personal data.
The LGPD is relevant for any company or organization that handles personal information of individuals in Brazil, no matter where the company or organization is based.
The purpose of personal data protection regulations is to promote transparency, innovation, and harmonious relationships in the digital economy by establishing clear rules and security measures to prevent trade barriers with other countries, as stated by Febraban.
In conclusion
Technology and investments are closely linked, as demonstrated by the digital transformation in the banking industry, which has revolutionized operations and customer service. This evolution is expected to continue, leading to even more personalized services.
Traditional banking systems are becoming outdated, as they are time-consuming, labor-intensive, and involve tedious process execution. This highlights the necessity for digital transformation to simplify and enhance task efficiency.
Covid-19 has altered investors’ financial and daily routines, prompting them to turn to mobile banking for a convenient and safe way to manage their banking and investment needs from home.
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