5 technology trends in the financial sector in 2022

Understand how financial institutions are adapting to the challenges of digital transformation in Brazil

The last two years have been a true whirlwind of emotions for companies in the financial sector. Traditional financial service models no longer make sense for increasingly connected and demanding consumers. Adding to this journey a Covid-19 pandemic, a possible major war, and rapid technological changes, financial sector companies are racing to gain competitive advantages born from their customer-centric and technology-driven approach.

On the other hand, this is just the beginning. The trend of the coming years being even more challenging in technological terms is a mantra that is part of the daily life of product, marketing, and technology managers in the financial industry.

New consumption practices through smartphones, the rise of Generation Alpha, a tsunami of data that provides real-time information for instant decision-making, among other factors, mark the challenges of the decade for banks and financial institutions.

In this article, we summarize the main trends that will impact not only the financial sector but also the industries that are “fintech-ifying” themselves, offering digital accounts and loans to their customers, for example, as is the case of the retail and insurance sectors.

#1 DevOps for cloud banks

Cloud computing for information storage is already a reality for many financial sector companies, but it is still a major trend for most Brazilian institutions aiming to reduce operational costs while increasing efficiency and performance. On the other hand, the benefits of cloud usage go far beyond that. Gains in scalability, security, and resilience aligned with a DevOps culture – a combination of cultural philosophies, practices, and tools that increase a company’s ability to deliver applications and services at high speed – ensure that financial institutions gain competitive advantages.

Furthermore, cloud technology enables the creation of cheaper and faster projects, which can be applied with the other technologies presented in this article, such as artificial intelligence, blockchain, and the use of smartphones.

The use of hybrid clouds, a combination of private and public cloud services, and multi-cloud, when more than one cloud service provider is used, are trends currently seen in the sector. According to a survey by Accenture, 60% of banks today use more than one cloud provider, in addition to having adopted multi-cloud operations. Moreover, ESG challenges (environmental, social, and governance commitments) can be better addressed when services are performed in the cloud, enhancing the promotion of sustainability and decarbonization policies in the financial sector.

#2 Mobile banking, the #MobileFirst

It is estimated that nearly 2 billion people do not use banks currently, but 66% of them own a mobile phone. This means that mobile devices are potential and valuable channels for financial institutions to increase their customer base.

Today we do everything with our phones, from shopping to scheduling, even romantic relationships are facilitated with this technology. And physical money? Almost nobody carries it in their wallet anymore. Over the last few decades, we got used to carrying plastic or metal cards, but now payments are online, made through smartphones. In an increasingly digital and connected society, smartphones bridge the physical and digital worlds, both part of the real world. This reality is even more present in the financial sector, where banks and insurance companies do everything they can to have the best app ratings on the App Store.

There are many factors that justify this digitalization. The economic aspect is the main one, as it is much cheaper for banks to provide their services without a physical branch and a large number of attendants. The social aspect of optimizing the user experience is another justification we will explore further. Moreover, being present in consumers’ pockets at all times generates a wealth of data that institutions can use for market gains. Reduction of bank fraud, biometric security, use of chatbots, banking services without the need for a physical card, customized communication, among other factors, are challenges that the product, technology, and marketing areas of the financial sector are facing.

#3 Blockchain, much more than cryptocurrencies

Blockchain technology became known due to the rise of the cryptocurrency market, particularly driven by Bitcoin. However, blockchain is much more than that. This technology works as a decentralized and distributed database, where information is stored on different computers around the world without the figure of a person or centralized institution controlling the information contained in it. Furthermore, blockchain works with cryptography, ensuring that only key holders can edit information. Finally, this technology works with consensus algorithms, which guarantees that data changes are made only when there is consensus among the interested parties.

These characteristics already prove the disruptive power of this technology, especially for the financial sector, which is typically centralized and managed by banks under the watchful eyes of regulators, such as central banks. Such institutions can also benefit from this technology, as it facilitates operational infrastructure and avoids risks such as financial fraud.

The Digital Real is an example that will be operated on blockchain. It will be a CBDC (Central Bank Digital Currency) with the potential to improve the efficiency of the payment sector and enhance competition and financial inclusion for the population that still lacks access to financial services. With expectations to be launched by 2024, the objective of developing the digital real is to create a virtual currency issued by the Central Bank, used by those with bank accounts, payment accounts, cards, or physical money.

In 2022, we will still see several innovative cases using blockchain technology, with special attention to traditional financial institutions and new banks and fintechs.

#4 Artificial intelligence and machine learning

Pioneering by nature, the financial sector was one of the first to use artificial intelligence (AI) for process automation, fraud prevention, and automatic risk assessment. However, not all companies in the sector use this technology, and those that already do can use it in many other ways to gain competitive advantages.

With financial startups, fintechs, and digital account offerings from retail, traditional banks face competition like never before. Technology giants like Apple, Amazon, and Google already provide payment services that integrate two of the technologies mentioned earlier in this article. Technologies based on data and working in conjunction with AI enhance the operations of financial institutions in terms of efficiency and scalability. The challenge lies in transforming repetitive tasks into codes that accelerate decision-making by managers and consumers of financial services.

According to IDC research, the retail sector is the only one that intends to have a higher AI investment than the banking sector in the coming years. The possibilities for using AI are vast and impact all departments of institutions that offer financial services, such as for handling credit requests.

#5 User Experience as a technological-relational differentiator

So far, we have seen that various technological trends related to the backend of financial sector companies are already being used, albeit with room for improvement. These trends mainly help the operations, products, innovation, and technology areas. However, the productivity and competitiveness gains desired by marketing teams can also be observed as a point of attention. It is time to talk about the most important asset for institutions that make up the financial sector: people, customers.

Ultimately, all technologies presented in this article have the main objective of solving problems and improving consumers’ lives. Cloud services, blockchain technology, mobile device usage, and artificial intelligence, when used together and with a customer focus, tend to offer financial sector companies competitive advantages that ensure their sustainability in the market over time.

Offering an excellent digital experience through banking apps, for example, makes positive word-of-mouth and click-by-click referrals happen. It is a fact that the pandemic accelerated the optimization of digital experiences across various industries, but none was as assertive as the financial sector. Today the challenge is to further improve this experience, standing out from the competition and creating a permanent bond with customers. The use of artificial intelligence in banking apps for better portfolio management, or for investment recommendations based on behaviors and spending patterns, in addition to relationship through chatbots, are examples that can already be seen in some banks around the world. With this, financial industry companies ensure greater personalization of relationships with their customers, where data is used to optimize buying journeys and help customers make decisions.

Another point of attention that promises to optimize the digital relationship with customers in the financial sector is related to voice and the use of cameras. Voice interfaces in banking platforms are taking the financial sector to another level of sophistication and improving the way of relating to the one who is the reason for all investment: the customer.

In conclusion, we are certain that the trends and challenges for the sector go far beyond the 5 items analyzed in this article, but we also understand that these trends will permeate the planning of many teams in the Brazilian financial sector.

Daily here at Zappts, we support major market players in optimizing their products, services, and digital platforms in favor of positioning at the forefront of the tech world, such as: BTG Pactual, Santander, PagoNxt, Getnet, Porto Seguro, Auttar, among others.

*By Rafael Tiba, graduate of UNICAMP and Harvard Business School. CEO of Zappts since 2020.

If you are in the financial sector, have a technology challenge, and are looking for a partner with proven experience, count on us. Schedule a conversation by clicking here and accelerate your company’s digital transformation.

About Zappts

Since 2014, Zappts has been accelerating digital transformation for major brands with high-performance teams. Focused on software and application development, it builds solutions using the main stacks of Back-end, Front-end, UX/UI Design, Quality Assurance, and Cloud Environment Management. It operates in the planning, management, and operation of corporate digital solution development services, environment management, and knowledge transfer through information technology. A reference in creating digital experiences for users, in addition to developing innovative and fast solutions, the company operates in a 100% remote model, with teams distributed across more than 17 states in Brazil.