Unpacking how technology impacts investment banking

The disruption across industries from the rise of technological innovation is nothing new. Efficient algorithms and tailored data processing systems are changing the way almost every business operates. The investment banking world has seen an improvement in the decision-making process and stimulated efficiency. Major financial institutions that lean into technology optimise their business operations and client services offerings.

Just like other industries, banks have long been reluctant to update their systems. This is for the simple reason that the structure that they have created is the product of many years of continuous innovation and optimisation to meet corporate client’s immediate needs. However, the rise of FinTech, or Financial Technology start-ups disrupt the traditional ways of doing things with an array of digitisation.

The benefits of banks needing to react accordingly with their own innovation initiatives is a good thing as they deploy cutting-edge technology that focuses on a more customer-centric focus on products. This includes real-time smart data integration over slower analysis being reconciled and reported after-the-fact. Of the many technologies likely to disrupt the investment banking sector, there are a few that stand out. In this article, we expand on 3 of these leading advances:

Using Blockchain

Blockchain is a term used to describe a distributed ledger that records transactions between two or more parties effectively and permanently. Allowing multiple parties to access the same data at the same time, blockchain technology ensures integrity and stability.

Information recorded is made difficult or impossible to hack or cheat the system, adding a layer of security to match its functional convenience. Today, banks around the globe are pouring resources into finalising proof of concept ideas.

By using a trusted and encrypted ledger that nobody directly administers, blockchain technology can facilitate fast, secure, and low-cost international payment processes using real-time verification.  

Increasing Process Automation

The amount of unstructured data that banks are needing to process continues to rise in tandem with the digital economy. Not only the processing of banking data, but also important behavioural data that allows banks to improve customer experience with insights and refined innovation.

Financial institutions have realised the importance of implementing technologies that copy human actions and judgement but at higher speeds, quality, and scale. The solutions found commonly combine various technologies the blend robotic and cognitive process automation in banking.

Technologies that create bots that learn and improve over time are based on optimising machine learning. This enables language processing, chatbots, process automation and smart analytics. According to Deloitte’s 2017 State of Cognitive Survey, an unsurprising 88% of professionals in the finance industry believe that these technologies are a strategic priority.

Currently, robotic automation is lacks strength in the more cognitive and analytical processes. Over time, we are likely to see better combinations of current cognitive abilities and robotic process automation for better results. These are already implemented today for marketing solutions that are automatically suggested for individual clients’ needs.

Artificial Intelligence

In the exponential growth of both structured and unstructured data available in banks, along with advances in machine learning and cloud computing, the grounds for integrating artificial intelligence are more concrete than ever before.

AI assists banks to rise to the challenge of emerging competition as its application allows for the use of large collections of past data that is captured to make better decisions in multiple areas. These include customer experience, administration, marketing, compliance, and product delivery risk management.

Artificial intelligence would transform banks as they shift the focus from scale of assets to scale of data. The investment banking sector would aim to deliver tailored solutions to their clients and focus on high customer-focus as well as retention benefits. Technology and talent would work together to improve services in a new era of financial ingenuity.

The takeaway from the implementation of all these technologies is that banks must use them to focus on customer experience as opposed to revenue and cost-savings. While these are important factors, they are secondary to retaining customers with efficient, high-quality products and service.

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By | 2021-01-07T16:31:44+02:00 January 7th, 2021|Investment Banking|0 Comments

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