5 Ways IT is Disrupting Finance
By Addison Taylor
Over the years, Information Technology (IT) has grown into a global phenomenon, streamlining and improving the way many industries are run. Yet, out of the many industries that IT has disrupted, the financial industry stands to be changed the most.
This is true especially in BC, where we noted previously how Vancouver was ranked among the top 10 tech hubs in the world, ahead of Los Angeles, New York, and Sydney. On top of this, Vancouver has a growing demand for IT and management consulting professionals, which is why renowned tech companies are opening up offices here.
It’s not just about beefing up security protocols, either. Forbes reports that the FinTech industry is expected to have a 75% annual growth from now until 2025, with IT looking to redefine the entire industry. Here are some examples:
Blockchain is poised to become the next public ledgers, especially among banks. In particular, blockchain technology has the potential to speed up cross-institutional interactions, meaning that financial institutions can directly link to one another instead of relying on correspondent banking. Plus, it can also help bolster financial institutions’ security protocols. SecureKey Technologies has made their client verification software available for institutional use, with banks like Royal Bank of Canada and Bank of Nova Scotia on board with the use of digital IDs.
Quantum computing operates by going beyond the traditional utilization of binary ones and zeroes. This means that what was once unsolvable can now easily be examined. It is particularly beneficial for financial institutions who want to minimize risk with each transaction. For instance, Barclays is currently experimenting with quantum annealing, a method that creates single computational units through state superpositions and quantum entanglements. Such units have been helping the bank optimize large transactions, especially since these transactions have varying collaterals.
Big data analytics
As if its name wasn’t telling enough of its impact, big data has become so massive that 2.5 quintillion bytes of data are created on a daily basis. Mobile devices generate more than half of this data, with over 5 billion people using them worldwide. This is staggering, considering that Verizon Connect reveals how over 90% of all existing data has been created over the last few years. The use of this data has led to innovations such as algorithmic trading, where profits and trades are generated much faster than at a human’s pace. Big data can also help detect instances of fraud and crime, safeguarding against the frequency of data breaches that increase annually.
The rise of automation
On the subject of big data, automation is also on the rise to help financial institutions grapple with the increasing amounts of information. Robotic process automation (RAP) is one such example, more so when it comes to helping auditors generate reports. These reports are tedious and subject to human error, making RAP a welcome change. The International Conference on Business Excellence reports that the RAP market is growing, with profits from RAP sales reaching up to $1 billion.
Use of AR and VR
Augmented and virtual reality isn’t just meant for entertainment. MasterCard’s Wearality was launched during the 2016 Arnold Palmer Invitational PGA Tour as a way to offer a different purchasing experience for customers. VR technology has the potential to revolutionize e-commerce, which is why financial institutions are now looking to back it as the next innovation. Capital One’s partnership with Amazon’s Alexa lets customers settle payments using only their voice, arguably raising more than a few concerns about security. Nonetheless, these applications show how AR and VR can enhance customer experience, proving that IT applications aren’t just for internal processes.
About the Author
Addison Taylor is a Richmond-based financial analyst with a penchant for all things technology. When she’s not working, Addison enjoys video games and rock climbing.