Advancements in technology are helping to shape the future of the finance industry. Despite heavy regulation, compliance laws and increasing security threats, the move towards a digital landscape has changed the way the industry looked just a few years ago.
In this blog we are taking a closer look at what these changes mean for business.
Automation technology has been rapidly onboarded by the financial sector. In fact, finance is leading the way when it comes to the fast adoption of software to complete repetitive tasks. A focus on an automated digital strategy means that there will be less humans needed to do tasks that can be automated. As a result many jobs have been cut already. An example of this is ING, a Dutch bank, which cut back thousands of staff in its back offices, call centres and IT departments, as it reduced the number of IT systems it takes to run its business.
But it’s not all doom and gloom. With new technology in the industry comes new opportunities and job prospects.
Chief Digital Officer (CDO) is a role that’s seen significant growth in the past 10 years. The role of a CDO in the finance industry is to monitor competitors, develop digital strategies and look for ways to integrate them in the fintech ecosystem. Essentially CDOs need to keep a close eye on the digital world, identify how changes will impact customer needs and expectations, and infer how they will impact the finance industry. CDOs in the finance industry are usually well seasoned business professionals with years of experience, and are between 30 to 50 years old.
More roles are starting to emerge as the industry is evolving: accountants are already diving into more interpersonal relationships with clients and there are a number of other tech jobs the future cannot live without, such as data scientists, cloud architects and platform developers.
Cloud technology will transform the finance sector in years to come. This comes as no surprise as it’s shaping the way a multitude of industries do business. Infrastructure flexibility, reduced total cost of ownership, and shortened time to market are just some of the top reasons the finance industry is moving to the cloud.
However, it’s still early days. In March 2015 the Cloud Security Alliance found that only 18 percent of financial companies with employees between 501-5000 had a cloud strategy in place. They concluded that the financial industry is still in the early stages of cloud adoption, after they found that 61 percent of financial institutions surveyed were in the process of developing a cloud strategy within their organisation.
Advancements in cloud computing in finance will continue to be driven by compliance and security requirements. The decision to work on a public or private cloud will be a large challenge for financial institutions worldwide.
The finance industry also has its own wants and needs from cloud providers - here are the top requested features from 2015.
Fintech is a term that describes a whole range of emerging financial services that have been enabled by advancements in technology. Innovative entrepreneurs are disrupting the sector and are making it easier to reduce fraud, conduct trades, make payments, increase security, adhere to regulation etc. They’re more agile than traditional financial institutions and new players are constantly entering the market to challenge existing industry norms. Established financial institutions will need to adapt to meet the new standards set by these start-ups.
Innovative Fintechs include:
Transferwire: The start-up provides a cheaper more efficient platform for foreign exchange. It lets its users by-pass bank fees each month. In 2015 it had raised $91 in funding from investors including Richard Branson.
Ondeck: Is a start-up specialising in lending money to small business owners. Their technology enables them to say ‘yes’ more often than traditional lenders. So far the company has lent more than $4+ billion to 45,000 businesses in the USA and Canada.
WePay: WePay is a start-up that processes credit card payments on crowdfunding websites like GoFundMe or CrowdRise. Their small fees make them a better choice over traditional financial institutions.
A final word
In the future, the finance industry will look differently than it does today. Just like during the industrial revolution, jobs were lost to machines, jobs will now be lost to software automation technology. But this doesn’t mean that there won’t be new jobs. Skills will need to be broadened, and jobs as they currently exist will evolve. And this is highly prevalent with financial institutions adopting new technologies such as the cloud, or new Fintech solutions. Security and compliance will be a major focus area - people will need to monitor and ensure the institutions are taking the necessary steps and precautions.