The relentless transformation we are seeing in banking is, essentially, the result of four novel applications of technology: big data, artificial intelligence, cloud services and blockchain. Here we take a look at their impact over the past twelve months and how they can evolve.
Blockchain is one of the latest buzzwords. Twelve months ago, many had hardly ever heard about it. All most people knew was that it was the technology that enabled Bitcoin to work. Today, we pay much more attention to any development related to this distributed ledger technology than to anything going on with the virtual currency.
The reason for this change in perception is that the financial sector has become increasingly aware of the possibilities of the blockchain. It can streamline day-to-day processes, such back-office processes for financial systems, making them more transparent. Also, blockchain is already proving its worth in international payments: it makes them faster and cheaper. One thing that blockchain still has to prove is its disruptive capacity, i.e. the possibility that it will open the door to new businesses that we can hardly imagine today.
"We’re exploring how blockchain can be the solution to mediate in all these relationships between businesses or individuals and machines or things"
In a recent interview, BBVA New Digital Business CTO Carlos Kuchkovsky, explained how important blockchain can become for the commercial development of the Internet of Things: “We’re working on finding out what are the financial needs of automated and connected things. When a car is charging at a station it will need to pay, or will need credit if it does not have a wallet at that point in time, or it will have to charge the driver that is going to be using it. We’re exploring how blockchain can be the solution to mediate in all these relationships between businesses or individuals and machines or things”.
BBVA is one of the most active banks researching the possibilities of blockchain, a race in which top players have assembled different consortiums.
The use of the cloud as fully reliable technological solution is much more widespread. This year, the financial sector took some significant steps in the use of cloud computing. In May Oak North became the first British bank to move its core financial systems to the cloud with AWS (Amazon Web Services), also BBVA’s referred cloud infrastructure service provider.
Top financial institutions need increasingly safer, flexible and scalable cloud-based solutions to manage the exponential growth in operations typical of the digital era and the enormous amount of data it generates. This big data is, at the same time, a tool that is transforming the financial business.
It is already underway: Roboadvisors - with companies such as Betterment, which offers automated algorithm-driven data-based financial advisory services - are becoming a growing part of the ecosystem. “But data can help banks on so many more levels,” says Rodrigo García de Cruz, vice-president of the Spanish Fintech and Insurtech Association, “such as offering better services and improving cost control.”
Just like big data, Artificial Intelligence (AI) is another booming field Whereas it also holds tremendous potential, in terms of banking applications it is still in its infant stages, especially compared to other sectors. One of its most flashy and popular instances are chatbots, automated response systems that, in their most advanced versions, can hold conversations with humans.