Currency converter
All news
News Search Topics
Use filter
You can filter your feed,
by choosing only interesting

Evolution or Revolution: How Is Technology Changing the Global Financial Sector?

May 29, 2017, 17:51 UTC+3
1 pages in this article

Digital technologies (cloud-based data storage, predictive analytics, machine learning, blockchain, etc.) are changing the fundamentals of business approaches in the financial sector, with leading banks by the minute turning into IT companies with a licence to provide financial services. The consumers are following in lockstep, quickly adapting to changes in the industry. KPMG predicts that brick-and-mortar banks will disappear by 2030 and be replaced by electronic assistants.

The digital revolution is bringing changes to the business models in multiple industries. The financial and banking sector is no exception to that.

  • According to Harvard Business Review, 80% of business leaders believe that digital transformation will have completely changed their respective industry by 2020, with fewer than half of them having put in place an effective response action plan.
  • John Chambers, Cisco Systems Executive, claims that "at least 40% of businesses will disappear over the next decade, if they fail the transition to new technologies." 
  • Cloud-based technologies and Big Data are the driving force fuelling the transformation in the financial sector. The new technologies reduce capital expenditures, boost margins and make services more user-friendly.

Very soon, the technological progress will enable banks to do without staff, branches, cash or even direct engagement of online customers. For example, the IoT development will bring about refrigerators that make food orders and pay for them all by themselves.

  • In early 2017, Bank of America opened three US branches without employees, where customers only deal with terminals and can contact a clerk through a video conference if they need help.
  • Russia's Tinkoff Bank has opted for its branchless model from the very start interacting with customers online or by phone.
  • Early in the year, Herman Gref, Sberbank CEO, announced that the total headcount of the Group could be halved as a result of digital transformation. In November 2016, the plan to transform the bank into a "financial ecosystem" by the end of 2018 got a green light. The approved changes include transition to online banking services, automation of business processes, shutdown of physical branches and the ensuing reduction in headcount.
  • VTB 24 has introduced Big Data in underwriting processes to generate an additional RUB 19 billion in 2016. The investment in installing the system has already brought in a ten-fold return.

The use of advanced technologies in finance increases the ease of doing business, and also improves customer experience.

  • Paying for services (like utility bills, P2P transfers, etc.) with smartphones and mobile apps has become a part of everyday life.
  • Many banks use fingerprint recognition technologies to identify users of mobile apps and avoid the need to remember passwords.
  • HSBC is working on a voice ID roll-out to embrace all of its customers.
  • The contactless payment services from Apple and Samsung enjoy considerable popularity. These enable customers to link their bank cards to a smartphone and use it to shop.
  • The payments market is at the doorstep of a new era where payments are powered by social media and messengers. For example, in China customers can pay for services and shopping using an e-wallet embedded in the WeChat social network. Facebook and Telegram are also mulling over the launch of messenger payment solutions.
Show more
In other media
Partner News