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Five Inevitable Technology Trends for the Financial Industry

Felippe Mantteucci Melo, Vice President of Technology at IBM Brazil, uses the report from the IBM Institute for Business Value 2021 to explain the relationship between customers and financial institutions and shows trends in the digitization of services in this sector.

It was almost instantaneous: suddenly, customers’ experiences with the financial sector reached a level that few years ago, when they were impatiently waiting in line at the ATM, hardly anyone could imagine.

The relationship between people and banking institutions continues to grow exponentially, and that is why massive investments in technology are made. Because this contribution will of course accelerate the digitization of services and create new ways of connecting banks and their customers.

In the course of 2020, the financial sector in Brazil confirmed this scenario: Investments in technology here rose by 8% to around R $ 8.9 billion. Additionally, disruptive technologies have grown significantly in importance in IT investments, with AI being a priority for 93% of institutions, an increase of 10% in just 12 months.

As a specific example, according to the FEBRABAN 2021 Banking Technology survey, more than 618 million calls were answered by chatbot in the country last year.

Combined with such constant numbers, the banking sector will go through a new phase of transformation with the consolidation of open banking, a standardization of the process of sharing data and financial services by institutions through the opening and integration of technology platforms and infrastructures.

Trustworthy digital relationships have therefore become the most important asset of financial institutions. IBM recently released the IBM Institute for Business Value 2021 Global Outlook for Banking and Financial Markets Report on trends that will dominate this market in several countries including Brazil. I have listed some of them so that we can watch them.

Personalized, transparent and real-time services

With the COVID-19 pandemic, customers quickly migrated to direct service channels such as mobile apps and online banking. The significant increase in the use of these digital experiences has fueled the demand for personalized, transparent, real-time services that are integrated into the lives and businesses of customers. As a result, banks are accelerating and accelerating the adoption of technologies such as artificial intelligence, automation and hybrid cloud.

New Cloud-Based Business Architectures: An Inevitable Migration

Banking institutions are migrating to new operating models based on an open, hybrid multi-cloud architecture. To achieve the expected return on this investment, financial institutions can put 40-50% of the workload on a given public cloud, about 20% on a traditional public cloud, and the remaining 30-40% on-premises, based on a modern mainframe infrastructure. Banks are pushing this migration of business-critical workloads to the cloud.

Increase open and free data to generate leads

The banking industry has access to huge amounts of customer data that is becoming more and more open. Data environments need to be modernized using new analytical and artificial intelligence (AI) tools, while at the same time striking a transparent balance between ownership and shared use across entire ecosystems.

Newly defined workforce

Teams of employees, subcontractors and automated systems work together on new collaboration models for clearly defined tasks and specialist areas – accelerated by teleworking. The redefinition of the workforce combined with intense competition for digital talent will transform the way resources are recruited and managed across the industry.

Competition beyond the financial market

Large companies, including Big Tech, are expanding their business with their own financial services. They connect with customers, enable and use ecosystems around the lives of people and their companies. Through this movement, major financial institutions are also developing new value propositions addressing this unprecedented model of financial services consumption. They innovate “from the inside out” to connect with customers and engage them in non-banking platforms.

Just as people are immersed and largely adapted to the new technologies of the financial sector, institutions also need to be prepared and well managed by leaders who are prepared for new trends. The technological revolution is inevitable at all ends of the financial business, but it remains to be understood which companies are better prepared for it. The line at the ATM is undoubtedly behind schedule.

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