Emerging technologies are reshaping financial services. Here’s how

Credit: Unsplash

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Drew Propson, Head, Technology and Innovation in Financial Services, World Economic Forum


  • A new report from the World Economic Forum explores how emerging technology clusters are changing the financial services industry.
  • AI, IoT, cloud computing and 5G, among other technologies, offer new opportunities to both consumers and businesses.
  • Here are three ways in which we will begin to experience the effects of these technology clusters.
  • A new report from the World Economic Forum explores how emerging technology clusters are changing the financial services industry.
  • AI, IoT, cloud computing and 5G, among other technologies, offer new opportunities to both consumers and businesses.
  • Here are three ways in which we will begin to experience the effects of these technology clusters.

Words and phrases such as “disruption”, “revolutionizing” and “digital transformation” have become so commonplace in the context of financial services that they have lost their impact. Impact, however, is exactly where we are heading with emerging technologies. These technologies – such as artificial intelligence (AI), the Internet of Things (IoT), 5G, and quantum computing – are beginning to form powerful clusters that are collectively reshaping financial services, bringing new opportunities to firms and consumers alike.

What changes in financial services, then, can we expect in the near term, and how might businesses and individuals benefit? This is a core area of exploration in a newly launched report by the World Economic Forum, in collaboration with Deloitte: Forging New Pathways: The Next Evolution of Innovation in Financial Services. The report draws on more than 200 interviews and nine international workshops over the past year, engaging senior executives of financial services firms, experts, academics and regulators.

As outlined in the study, emerging technologies can be mapped into four main clusters, with AI and cloud sitting in the middle as the core cluster that unlocks other technologies. AI and cloud are essential given their ability to access and analyze data that other technologies generate, store and transmit. They are, thus, also part of all other clusters. The remaining clusters each centre around one of the following capabilities:

  • Bridging the gap between the physical and digital financial worlds, creating new ways of generating and accessing data (5G, IoT, task-specific hardware (TSH), AR/VR, AI, cloud)
  • Enabling new, more secure methods of orienting and structuring transactions of both value – such as currency and securities – and data (distributed ledger technology (DLT), privacy-enhancing technologies (PETs), AI, cloud)
  • Augmenting the analytical capabilities of AI (quantum, AI, cloud)
Image: World Economic Forum

What is truly exciting about these clusters is how they interact, allowing for the development of new financial products and services which, in turn, impact individuals and businesses in important ways. Here are three areas in which we will soon experience the effects of technology clusters:

1. Increased automation and embedded financial services simplify daily activities

By combining several of the technologies from clusters one, two and three, responsible automation can be achieved, allowing for seamless transactions for routine activities. This can lead to new revenue channels for both financial services firms and outside industries providing related products and services, while customers will enjoy a streamlined experience.

For example, consider the potential of a machine-to-machine (M2M) payments protocol facilitated by AI, cloud, IoT, 5G and DLT. Here, a payment network, or consortium of institutions, develops a protocol through which asynchronous M2M payments are decisioned, authenticated, transmitted and received on behalf of consumers. Such a protocol could be used to enhance a number of user experiences.

Take, for instance, an electric vehicle that has an embedded digital wallet linked to the owner’s bank account. Through previously determined consent parameters, when the owner drives through tolls, recharges and parks, payments could be automatically deducted from the wallet, simplifying the cumbersome process of making payments individually. Payments are also collected, as the owner has enabled selling power back to the grid when the vehicle is expected to be idle for some time.

Or consider a short-term property rental company that has a digital wallet linked to its commercial bank. The wallet receives payments from guests, pays out maintenance fees and taxes, and hires cleaners and other essential services autonomously. The wallet is also linked to a property’s mortgage and can pay monthly charges based on guest revenue. Ultimately, administrative duties are significantly reduced.

2. Cross-industry partnerships flourish allowing customers’ financial and non-financial services needs to be addressed simultaneously

Financial services firms are increasingly working to meet customers where they are, with tailored products and services at the moment of need, or in anticipation of the need. Emerging technology clusters are enabling granular data collection alongside timely analysis and secure information sharing, helping firms identify what services would most benefit each customer and when. These same technologies are facilitating cross-industry collaborations, allowing firms to offer full end-to-end customer solutions.

A plausible insurance use case can underscore the opportunities that exist here. By employing AI, cloud, 5G and IoT, a connected post-claims solution could be developed. This post-claims experience is created through a connected ecosystem of product and service providers that collectively offer a differentiated claims handling process to drive customer loyalty and increase back-office efficiency.

Process flow for a connected post-claims experience
Process flow for a connected post-claims experience Image: World Economic Forum

Take auto insurance. Imagine: an accident occurs, and the insurance company is automatically notified of the incident. Based on sensors that are embedded in the car, the company also has immediate information on the speed of the car at the time of impact, airbag deployment, fluid levels, and other relevant details.

From their analysis of data collected through IoT sensors, the insurance company is able to gauge the extent of the damage and determines that it is not a serious accident but will require rapid assistance. The insurance company maintains a number of cross-industry partnerships through an approved supplier network and leverages them to provide immediate services related to the accident. The insurance company notifies the driver that a tow-truck and additional transportation for the driver are on the way. Furthermore, the insurance company books a rental car and an auto body shop appointment for the following day, easing the burden of the incident.

3. Customers will not think about financial services

Perhaps the greatest achievement of the new evolution in financial services will be that many of the changes brought about by emerging technology clusters may not be noticed at all. That is, a business or individual will find that their financial needs are being met, and financial opportunities available to them are greatly expanded, but this will be accomplished so seamlessly, and integrated into one’s life so fully, that the financial services and products themselves will not be front of mind.

The World Economic Forum’s report highlights several use cases, beyond those outlined above, that offer a window into how this customer-centred environment is developing. While we may not be able to completely predict what is next in financial services, with emerging technologies enabling automated feedback loops, we can be certain that the customer will remain centre-stage for years to come.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

No great discovery was made without a bold guess – Isaac Newton

Ocean life faces ‘onslaught of threats’ from human activity, but tools exist to save it

How technology is driving a fourth wave of environmentalism

Sweden is fighting loneliness by housing older and younger generations together

Japan must urgently address long-standing concerns over foreign bribery enforcement

EU@UNGA 74: Working towards a more peaceful, secure and prosperous world

Do men and women really have different leadership styles?

INTERVIEW: Advancing human rights, a ‘never ending process’ says new UN rights chief

How regenerative agroforestry could solve the climate crisis

How has policy affected employment in small businesses in the US?

Young people demand a transparent job market: new campaign launches on international interns day

Brexit: Is there anybody supporting a non-violent separation?

Spring 2019 Standard Eurobarometer: Europeans upbeat about the state of the European Union – best results in 5 years

Mental health in the times of coronavirus

Juncker’s Investment Plan in desperate need for trust and funds from public and private investors

Parliament gives green light to EU-Singapore trade and investment protection deals

COVID-19 will hit the developing world’s cities hardest. Here’s why

Countering illegal hate speech online – EU Code of Conduct ensures swift response

Syrian Refugees in Germany face distinctly different challenges than those in Lebanon

Somalia: UN congratulates Puntland region’s newly-elected President

Reflections on the the biggest refugee crisis since World War II

FROM THE FIELD: Hardy seeds bear fruit to protect Colombia’s environment

UN health agency welcomes Facebook pledge to stop vaccine misinformation from going viral

European Elections: “Web giants” are urging users to vote

Huge areas of the Arctic are on fire – here’s what that means for the planet

Commission presents first reflections on building a strong social Europe for just transitions

Hostilities in Syria’s southwest, mean cuts in vital aid across Jordanian border: Senior UN official

These 4 skills can make the world better after COVID-19

3 leaders on creating a pipeline for female talent in business

Commission deepens criticism on German economic policies

EU deserves the title of the Syrian affair merchandiser

Erdogan’s electoral win on a ‘me or chaos’ dilemma means trouble for everybody

This is what happens when a school swaps french fries for quinoa

Who is to pay for Trump’s trade war against China?

COVID-19: MEPs urge quick action to prevent “huge recession”

Turkey to let EU alone struggle with the migrant crisis while enhancing its economic ties with Russia instead?

Universal Health Coverage in the EU: Are we really leaving no one behind?

Topic: Mental Health in times of pandemic: What can each individual do to lessen the burden?

Antitrust: Aspen proposes 73% price reduction for six off-patent cancer medicines to remove Commission’s excessive pricing concerns

Trump declares emergency and WHO urges speed – latest coronavirus updates

It’s ‘time for concrete action’ says UN chief, welcoming inter-Korean agreement

European Commission launches global coalition for biodiversity

Coronavirus: 23 new research projects to receive €128 million in EU funding

Climate change: won or lost in cities or by cities?

Ending extreme poverty crucial to sustainable future for all: UN chief

How Japan and Singapore are reinventing old age

Simple Technology Saving Lives: Remote Auscultation

A Sting Exclusive: Towards better business opportunities for the EU and its neighbours, Commissioner Hahn live from European Business Summit 2015

UN chief welcomes South Sudan’s Unity government, lauds parties for ‘significant achievement’

Spring 2020 Economic Forecast: A deep and uneven recession, an uncertain recovery

Migration: Commission steps up emergency assistance to Spain and Greece

Nuclear test ban treaty critical to global collective security – UN chief

Protecting Health Workers’ Safety Around the World

Human traffickers in Libya are posing as UN staff, says Refugee Agency

“If the job market doesn’t exist, then even the most brilliant Youth Guarantee cannot ensure a job to these young people”, European Youth Forum Secretary General Giuseppe Porcaro on another Sting Exclusive

A new generation of women leaders is making waves in the Arab world

Do the EU policies on agro-food smell?

EU and China seize momentum to enhance trade agreements in response to Trump’s administration

Businesses succeed internationally

International Women’s Day 2019: more equality, but change is too slow

More Stings?

Advertising

Trackbacks

  1. […] Emerging technologies are reshaping financial services. Here’s how  The European Sting “airbag when:1d” – Google News […]

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s