Finch Technologies co-founder Michael Bowren shares insights on the technology trends set to transform the financial sector in 2023. From AI-driven customer experiences to blockchain-powered transactions, the future of finance is ripe with possibilities.
The increasing demand for personalised, immediate service, paired with the proliferation of digital data has created a need for emerging technologies. Consequently, many companies are now looking to implement advances that will give them an edge in the market.
In the next year, we can expect to see some of these new technological advances directly impacting the financial industry at a rapid pace – both institutions operating at scale and those just beginning their ventures. With the help of industry thought leaders, we take a look at some of the biggest technology evolutions making waves in Africa and beyond.
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AI evolution
The impact of AI on in-person services will continue to be profound and far-reaching, with the AI market expected to reach 422.37 billion by 2028, up from nearly 59.67 billion in 2021. The rapid emergence of AI is transforming the physics of the financial industry, loosening constraints on traditional institutions and creating new opportunities for innovation.
This shift is resulting in new operating models across the sector. In the banking sector, AI applications include chatbots powered by Natural Language Processing (NLP), fraud detection where AI can identify previously undetected transactional patterns and suspicious behaviour, credit risk management and accurate forecasting and prediction.
“As AI evolves, it will be a great addition to streamlining processes to assist in ensuring seamless engagement with customers, doing routine checks from a compliance and risk perspective and automating processes – allowing those who work in the financial sector to focus on more strategic and forward-looking tasks,” explains Lungile Mashigo, founder of Stripped Money Conversations and senior marketing manager.
AI’s potential to revolutionise healthcare is undeniable with the ability to analyse data to detect diseases, such as cancer, at an early stage with unprecedented accuracy. Its capacity to monitor heart conditions and other ailments through consumer wearables and medical devices facilitates proactive healthcare in potentially life-threatening situations.
Health insurers more specifically could realise substantial savings by utilising the features of AI to help detect anomalies related to fraud, abuse, waste management, and claims utilisation. Early identification of these patterns can be a major benefit, with McKinsey reporting a $100 billion annual saving as a result of better insight.
Florah Chuene, lead engineer at Zoie Health, says: “Imagine a world where your grocery shopping cart is scraped with your health in mind and outputs a health analysis with commendations and recommendations. There is no limit to the innovations and advancements AI can have on proactive health even in industries that are not traditionally classified as healthcare, but affect your health”
Industrial sensors and location trackers have been around for quite some time, but the near future will see an exponential rise in the number of consumer devices connected to various networks. Smartphones, cars, home assistants – this existing technology will adopt many more users over time.
Additionally, newer categories such, as clothing, eyewear, home appliances, medical devices and shoes will ensure that there are an estimated trillion connected devices worldwide by 2025. This information presents carriers with data that can enable a deeper understanding of clients which will consequently result in personalised pricing structures and real-time service delivery on their insurance.
The rise of SaaS technology
The software-as-a-service (SaaS) model will gain traction as new technology-focused businesses shift their focus to a SaaS business. Over the last five years, there has been a slow uptake from small businesses, however now that the benefits are evident, SMEs are leveraging niche external technologies.
Time and risk are the two biggest reasons for this demand. Large institutions will be able to push the risk onto the third-party SaaS provider, it’s also faster to outsource this initial build, and it’s a whole lot cheaper to maintain.
According to Gartner, global public spending on Saas will go up 18% in 2023, from $176,622 million to $208,080 million. As cloud technology continues to evolve, financial institutions are taking advantage of SaaS solutions.
By leveraging these resources, banks can upgrade their core software, improve customer experience, reduce costs and increase profit. The benefits make it an attractive option for any organisation looking to stay competitive in the changing financial industry.
AI is benefiting many industries and swiftly becoming a standard feature in the SaaS sector. By combining SaaS and AI capabilities, it’s possible for banks to further enhance their security, automate threats and allow for personal services.
“SaaS plays a pivotal role in providing the fintech industry with powerful ways to augment and expand their products/services. As more companies recognise the benefits of SaaS, we can expect to see continued investment and innovation in this space,” explains Dominic Arendse, CTO of Finch Technologies.
Next generation software development
Financial institutions are constantly looking for new ways to innovate and keep up with the growing demands of their consumers. These developments could include anything from fresh new features to updating and refining their existing solutions, however, innovation is not always an easy feat, and one that usually comes with a hefty price tag.
Root solution engineer Rebecca Lain says, “Low code platforms are gaining popularity in the insurance sector due to their cost-effectiveness and flexibility. Every insurance product is unique and low code offers the ability to cater for business-specific edge cases common in this industry. This gives financial institutions the control they need to remain competitive and meet growing and evolving demands in the market.”
Software development is facing unprecedented changes and the necessity for code in numerous industries is growing. According to IDC, the worldwide population of low-code developers is expected to grow with a compound annual growth rate of 40.4% by 2025. Low-code and no-code software are two emerging alternatives to traditional development that are seeing substantial growth due to this need. These tools supply users with the necessary code components, allowing financial services firms to complete customisation processes in-house instead of relying on an outsourced technology vendor.
According to senior engineer Nikolaos Spyratos “low and no code can be a great accelerant. It’s customisable while being easy to use, instead of having to grab a rigid and complex off-the-shelf system at a high price, or having to spend countless hours writing software and having all the knowledge and tooling which that requires.”
Tech advances are constantly reshaping the way in which the financial sector operates. Fintech companies, SaaS providers, AI and low-code solutions will be the rapid driving force servicing the underserved in South Africa’s financial and insurance sectors. Companies that embrace these developments will assist in better inclusion, health services and education.
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