The advent of Fintech disrupters fundamentally changed the financial sector. Many established incumbents embraced innovative cloud solutions in a bid to gain a tech advantage over up-start competitors. But the rapid pace of innovation is a challenge for all financial firms, with a balance between maintaining complex technological ecosystems and incorporating new tech not being a small task.
One of the most powerful burgeoning technologies that financial institutions are looking to embrace is 5G. From improving the digital experience to expanding the potential for embedded finance; 5G is set to make a major impact on how banks and other finance companies operate.
For example, retail banks can provide a truly revolutionarily experience by offering customers extended reality solutions so they can better visualise their financial circumstances. Sensors, backed by 5G connectivity, can be placed in the home or on vehicles to enable real-time insurance offers that are deeply personalised to the exact requirements of the customer.
According to a report from Ericsson, the number of 5G subscriptions is set to exceed 580 million by the end of 2021, illustrating the growing accessibility of 5G-connected solutions and products. Retail banks, too, can use 5G-enabled technologies to quickly create branch pop-ups for remote populations far easier than at the moment, thanks to the high-quality connection and data speed 5G offers.
The innovative use of physics in finance is nothing new, but the promise of quantum computing has the potential to transform how algorithms and models are used in the industry. By utilising the properties of quantum physics to perform complex calculations, areas such as fraud detection, risk management and high-frequency trading can be improved.
Massive amounts of data are typically analysed during banking operations to reach the most accurate end result. The power of quantum computing to quickly analyse complex data from a range of sources is one of its key strengths. In a project that useby Fid quantum computing, FinTech firm Deutsche Börse applied this innovation to a conventional Monte Carlo simulation and reduced the time this process took from up to ten years to less than 30 minutes.
With BCG estimating that quantum computing can unlock long-term value of $42 billion to $67 billion for financial institutions, the value of this innovation is substantial. The use of quantum computing is complimentary to existing AI and machine learning technologies for financial services firms.
The highly increased processing power of quantum computing allows companies to effectively process huge data sets that are unstructured, offering the potential to enhance decision making and customer service across the business. Virtually any area of a finance firm that uses a large amount of data can benefit from this technology.
While the complexity of this innovation is making its development relatively slow, there is no question it offers a high level of promise and those firms that disregard it will find it difficult to remain competitive.
Join us at the Fintech Talents Festival on the 15 & 16 November at the Brewery in London to hear an impressive line-up of speakers discuss Emerging tech – Evolving FinServ.
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By Finbarr Toesland, Editorial Contributor, VC Innovations
