The Advanced Tech Transforming Financial Services

A raft of new digital technologies are proving to have a profound impact on the financial services industry here in 2024. In fact, the sector is undergoing a rapid transformation, as innovation reshapes the way that financial products and services are delivered and accessed. The concept of decentralisation is becoming ever more integrated throughout the industry, with big name financial institutions expanding into markets like cryptocurrency and blockchain. Meanwhile, decentralised finance (DeFi) is emerging as a powerful alternative to traditional banking methods, while play-to-earn gaming introduces a radical new opportunity for consumers to monetise their leisure time. 

In this article, we’ll dive into the advanced tech reshaping the financial service industry for the 21st century.

The Impact of Crypto and Blockchain

You might already have heard of the booming crypto trend by now. Decentralised tokens like Bitcoin (BTC) and Ethereum (ETH) have been causing quite a stir amongst consumers and investors alike for close to a decade. While cryptocurrencies are now widely regarded as being a viable digital asset class in an investment portfolio, and are offering up improved and more transparent processes in financial transactions, perhaps the most dramatic impact they’ve had is the emergence of the play-to-earn (P2E) sector. 

AKA GameFi, P2E gaming is creating new economic opportunities for players to earn rewards with real-world financial value, which aren’t limited to country or jurisdiction legislations like most traditional banking systems are. While we’re used to gaming and real money normally being associated with sectors like online poker, itself a booming market in which players can both compete and learn the rules of the game at regulated platforms such as PokerStars. All in all, GameFi enables gamers to monetise their in-game activities.

Meanwhile, the sector is an attractive investment opportunity for both individual and institutional investors. In backing new crypto gaming projects, native currencies, or even in-game assets, investors can gain exposure to the strongest crypto markets with long-term potential. 

Decentralised Finance Takes Hold 

Alongside the rise of GameFi, blockchain innovation is also fuelling the rise of Decentralised Finance (DeFi). This is a concept that democratises financial services for the consumer, doing away with the need for traditional intermediaries like banks, and offering solutions to the global unbanked in the process. 

The key components of DeFi, like many consumer-facing financial products, revolve around lending and borrowing. DeFi platforms allow users to lend and borrow assets in a peer-to-peer model, often with much more favourable terms than traditional banks. Decentralised exchanges (DEXs) enable users to trade cryptocurrencies directly, providing greater privacy and reducing the risk of hacks, and the sector even allows for passive income generation via yield farming and staking mechanisms. Not only do such processes allow users to earn rewards by providing liquidity to DeFi protocols, but they also foster a more participatory financial ecosystem. 

An AI Revolution?

It seems that Artificial Intelligence is being integrated across a whole spectrum of industries, and the financial services markets are no exception. The tech is becoming an increasingly popular way for organisations and financial institutions to take advantage of process automation and generate deep insights that can impact customer relations. 

A fundamental application of AI in existing financial entities, for instance, can be seen in automated customer services offerings, where AI-powered chatbots and virtual assistants provide personalised customer support. 

A more sophisticated version, the Robo-advisor, is underpinned by AI-driven platforms to provide tailored investment advice and portfolio management, making wealth management accessible to a broader audience in the process. Meanwhile, AI algorithms have the ability to analyse massive datasets to identify and predict market trends and risks, aiding in more informed and accurate decision-making across the board. 

Looking to the Future

Several finance and banking incumbents have already begun to leverage AI and DeFi to transform their operators. JP Morgan Chase uses AI to automate document review processes, for example, while HSBC has implemented AI-powered systems to support anti-money laundering (AML) and fraud detection processes. Just this year, the leading lights in the finance sector began trading crypto ETFs, with Blackrock’s Bitcoin ETF becoming the largest fund in the world.