2021: An evolving landscape for financial services

2020 has distinctly changed the operating landscape for financial institutions. Like many businesses in other industries, financial services companies have had to adopt a digital-first approach to effectively reach and serve its customers. Businesses have taken the leap to become more tech savvy adopting technologies such as quantum and cloud computing, artificial intelligence and machine learning to provide more efficient and secure services.

Digitization became the ‘talk of the town’ again gaining immense popularity in webinars and digital conferences. A plethora of issues were tackled in these conversations including addressing legacy systems and operations, cutting costs, providing simple and accessible financial services for retail customers, catering to corporate customers and SMEs digitally, continually providing a premium service for HNWI, how to best use technologies for various functions of the business and many more.

The epidemic awoken a dormant population to the power and necessity of technology. There are a few tech trends that have emerged and will continue to evolve this year.

Quantum Computing

Quantum computing has made its way into the spotlight throughout the course of 2020. Quantum computing is defined as an area of computing focused on developing computer technology based on the principles of quantum theory. It uses quantum phenomena such as superposition and entanglement to perform computation.

This shift in computing is expected to create innovative ways of solving existing business problems and ideate new opportunities. It is expected to enhance performance in various areas such as financial forecasting, weather predictions, supply chain planning as well as drug and vaccine development. Quantum computing as a service (QCaaS) is also expected to be a natural choice for organizations in their day-to-day business activities. The cloud system has proven itself in providing efficiency, security and customization. It is gaining traction amongst big enterprises and will continue to do so in this year.

Automated Machine Learning

Automated machine learning (AutoML) and machine learning operations (MLOps) are two other trends that have sharply gained popularity in 2020. They provide organizations with end-to-end visibility and has become an efficient tool to steer clear of duplicated efforts in AI. Together with advanced prediction algorithms, AI is expected to play a decisive role in preventing data security breaches. The in-memory-accelerated-real-time AI will also be needed, particularly in an era where 5G has begun to create new opportunities for disruption.

Larger banks are also expected to benefit from AI-driven optimization. The urgent need to digitize has revived the digital sentiment in public organizations such as government agencies as well as large corporate institutions. Data-driven decision making and proactive public policies during the pandemic has had greater support and appreciation from society. Large banks that are implementing various AI-driven optimisation and design of business processes are creating measurable improvement in various areas of the business including customer service.

Additionally, open banking will also start to have a more significant impact on app-based payments. It is expected to bring together connected organizations to create better user experiences by sharing ideas through open APIs and further driving competition to meet constantly evolving consumer needs.

Digital Corporate Bank

2021 will also see the rise of digital corporate banks to complement their existing retail banking propositions. With online and mobile banking being well-established, the next step for financial institutions would be to provide corporates and SMEs with similar digital services.

With communication platforms such as Zoom, Cisco Jabber and Microsoft Teams proving themselves to be efficient channels of communication throughout the pandemic, more interactions with SMEs and corporate clients are also expected to move online. This will provide relationship managers (RMs) the ability to initiate new relationships, open new accounts, advise on suitable financial products and fulfil transactions remotely and predominantly via online platforms. RMs would be more accessible to clients and this in turn would help banks compete with new entrants such as big tech companies such as Ant Group and Amazon.

Wael Salem, CEO at Tradesocio.