2023 – Three Technology Trends Gaining Traction in Banking and Investment Services

As Banking and Financial services institutions look forward to growth, managing risks and optimizing cost and efficiency becomes imperative. Adopting new technological innovation can help in this regard. Generative AI can help in predictive risk management for banks against frauds. Similarly, autonomic systems have a variety of use cases specially in the neo banking context. Within financial services, data has an inherent role in any analytics, computing and data monetization efforts. The adoption of PEC is on the rise in use cases like fraud analysis, intelligence operations, data sharing and anti-money-laundering.

Leading Analysts project that IT spending by banking and investment services firms is forecast to grow 6.1% in 2022 to $623 billion worldwide. The largest category of spending is IT services, which includes consulting and managed services and accounts for 42% of total IT spending in the sector at $264 billion. The fastest growing category is software, with spending forecast to increase by 11.5% to $149 billion.

  • Trend 1: Generative AI

Gartner predicts that 20% of all test data for consumer-facing use cases will be synthetically generated by 2025. Generative AI learns a digital representation of artifacts from data and generates innovative new creations that are similar to the original but does not repeat it. In banking and investment services, application of generative adversarial networks (GANs) and natural language generation (NLG) can be found in most scenarios for fraud detection, trading prediction, synthetic data generation and risk factor modeling. It has potential because of the ability to take personalization to new heights.

  • Trend 2: Autonomic Systems

Autonomic systems are self-managed physical or software systems that learn from their environments and dynamically modify their own algorithms in real-time to optimize their behavior in complex ecosystems. They create an agile set of technology capabilities that support new requirements and situations, optimize performance and defend against attacks without human intervention. Gartner predicts that by 2024, 20% of organizations that sell autonomic systems or devices will require customers to waive indemnity provisions related to their products’ learned behavior. Currently, autonomic systems are mostly software-based in the banking context. However, humanoid robots are emerging in smart branches that are examples of hardware-based autonomous systems that cater to clients and customers. They could be applied in autonomous debt management, personal finance assistants and automated lending.

  • Trend 3: Privacy-Enhancing Computation

Privacy-enhancing computation (PEC) secures the processing of personal data in untrusted environments — which is increasingly critical due to evolving privacy and data protection laws, as well as growing consumer concerns. It uses a variety of privacy-protection techniques to allow value to be extracted from data while still meeting compliance requirements. Gartner predicts that 60% of large organizations will use one or more privacy-enhancing computation techniques in analytics, business intelligence or cloud computing by 2025.