Emerging technologies disrupting the financial sector in Asia

by BlogWriters.in

Asia is the world's consumer growth engine; if you ignore Asia, you risk missing half of the global picture, a USD 10 trillion consumption growth opportunity over the next decade, according to global management consultants, McKinsey and Company. However, Asia's consumer markets are changing dynamically, with new development angles providing opportunities for financial services providers and shifting or mutating consumption curves. Emerging technologies continue to affect how the financial sector of Asia is getting shaped. Below are some of these technologies.

Emerging technologies in the market

1. Cloud Computing

Cloud computing was greatly embraced by the finance sector as many institutions and service providers saw its advantages. The financial industry still has a long way to go, even though cloud computing has been increasingly included in its operational procedures. Stephan Fabel, director of products at Canonical, claims that financial institutions lag behind other industries because 70% of them are still in the trial-and-error phase of implementing cloud computing as a key component of their IT infrastructure.

A recent prediction made by Accenture indicated that up to 80% of current banking revenues could be impacted in upcoming years, with cloud-native fintech disruptors continuing to lead the way.

2. Open APIs

Open APIs, also known as application programming interfaces, forge connections between businesses, consumers, and goods and services, particularly in the payments industry. It makes it possible for the software applications and programmes of many businesses to interact and communicate with one another, resulting in more effective and dependable online banking and better customer service.

Financial institutions can now expand their services by giving other businesses access to specific company data and capabilities that they can then seamlessly integrate into their digital payment system by opening up their APIs. The finance sector can maintain its competitiveness and relevance in the digital ecosystem in this way.

3. AI & ML

In the financial sector, machine learning (ML) and artificial intelligence (AI) are thought to be revolutionary game-changers. Through algorithms that allow banks to precisely sort through, evaluate, and use millions of data points, they can resolve a wide range of complicated business challenges. Financial institutions can automate procedures, evaluate and manage risks, and find and stop fraud using the precise analytics offered by AI and ML.

4. Internet of Things

By creating a network of wireless connections over the internet, the Internet of Things, or IoT, connects almost everything under the sun, including gadgets, cars, appliances, buildings, and people. The global Internet of Things (IoT) market was worth approximately 182 billion US dollars in 2020 and is expected to grow to more than 621 billion US dollars in 2030, more than tripling its revenue in 10 years. IoT provides BFSI with a variety of digitalization benefits, including 360-degree customer visibility, enhanced financial security, fraud detection, advanced insurance strategies, and more.

5. Robotic Process Automation

The global Robotic Process Automation in finance services was valued at USD 340.95 million in 2020 and is projected to reach 4883.41 million USD by 2030, growing at a CAGR of 30.9% in ten years. Using RPA, financial institutions can efficiently perform back office, front office, and support tasks by automating repetitive business processes and tasks.

6. Blockchain and Cryptocurrencies

Although the term "blockchain" is more frequently related to the cryptocurrency market, it may have benefits for the banking industry as well. The blockchain is immutable because it is highly encrypted; even though the transaction data is transparent, once it has been confirmed and uploaded to the blockchain, it cannot be changed.

NFTs (non-fungible tokens), which are based on blockchain technology, is another innovation that has risen in popularity over the past few year

Everyone was perplexed when Twitter founder Jack Dorsey sold his first tweet by converting it into an NFT for a gigantic amount of $2.9 million. NFTs' popularity has continued to soar, and several sectors, including banks, are keeping a careful eye on the situation.

7. Instant payments

Instant payments offer real-time services that enable people to conduct financial transactions electronically 24 hours a day, 365 days a year. This technology enables customers from all over the world to instantly process transfers and receive payments in real-time, anytime, and anywhere. The instant payments system can be integrated with other financial technology, such as open application programming interfaces (APIs), to increase banks' reach and offer up new potential for worldwide expansion.

Thrive amidst the disruption

Although legacy systems have served the financial sector well for many years, they are no longer the most effective options. Without being constrained by these antiquated processes, fintech startups are constantly developing cutting-edge tools and systems that have the potential to displace conventional financial models.

It is impossible to dispute the advantages of digital transformation. However, several issues that must be addressed by enterprises also arise as a result. Initiatives related to digitisation should therefore not be rushed. To decide how to digitise each process or each department, old technologies and systems must be properly reviewed and appraised.

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Saturday, 04 February 2023