A deeper look into how technology is innovating the financial sector

With every new technology comes great opportunities, and it’s no different in the financial sector. In fact, the opportunities provided by technological advancements in banking are changing the industry as we know it, from an in-person experience to a personalized, AI-powered digital experience.

There are also threats in this new banking landscape. Financial institutions are a very lucrative target for hackers, and the amount of regulations and legacy technology in banks make it hard to keep up with all the technological innovations happening around them.

In our latest #IDGTECHtalk Twitter chat we met with the experts to discuss how technology is innovating the financial sector.

Mobile banking is on the rise

“Connected banking” is one of the greatest improvements that technology has provided the banking industry, heavily in thanks to the mass adoption of banking from one’s mobile phone. Consumers can now bank anywhere in the world, regardless of physical proximity to their bank. This mobility has also ushered in the need for greater communication between the separate departments of a financial institution.

Large banks are a complex amalgamation of different departments. Technology can be invaluable in connecting all of the disparate parts of the bank. From lending, fraud, customer service, payments, settlements. loans, regulatory, KYC, AML & everything in between. #IDGTECHtalk –Ben Rothke (@benrothke), Senior Information Security Specialist with Tapad

More financial data is both a blessing and a curse for banking customers

When it comes to making educated financial decisions, the amount of data available through technology can help customers to make wiser banking decisions.

Tech empowers customers to make better financial choices through 24×7 real-time data. Balances. Transactions. Credit applications. Mobile apps. Security. Authentication. Payments. Customer/Provider communication. Even locking down credit through clearing agencies #IDGTECHtalk –Adam Stein (@apstein2), Principal of APS Marketing

At the same time, more data can also overwhelm customers into poor decisions. Without the proper expertise and understanding of the financial industry, the complexities buried within banking data can be misinterpreted.

Online banking & mobile apps make it easy for consumers to analyze their financial data in real time using charts & graphs which even a non-accountant can interpret. There’s no tech solution yet to improve financial literacy across audiences (at least not yet). #IDGTECHtalk –Will Kelly (@willkelly), Writer focused on the Cloud and DevOps

AI is personalizing banking in ways never before seen

Personalized banking is a buzzword that is now coming to fruition, thanks to artificial intelligence. AI analyzes individual spending behaviors so effectively that banks and other financial institutions can now personalize banking based on each customer’s unique patterns.

I think AI is going to discover patterns in user behavior that will allow financial institutions to create new features or products that they hadn’t even thought of. #IDGTECHtalk –Larry Larmeu (@LarryLarmeu), Tech Transformation Leader at Accenture

This includes things like targeted shopping deals and specific credit or loan offers, or even new personalized communication strategies and customer advising. However, it requires a technology overhaul to provide comprehensive personalized banking, and many institutions have yet to do so successfully.

AI is also helping the financial sector protect against fraud and identity theft  

Text messages like “Did you attempt this transaction?” are becoming more prevalent than ever, thanks to the power of AI. And improved methods of catching fraudulent banking behavior in the act continue to develop, such as better identity management and multi-factor identification.

Best tech processes banks use to identify and prevent fraud involve 2-factor/multi-factor authentication: Email. SMS. Phone. Challenge Questions. Bot detection. In-app Messaging.  #IDGTECHtalk –Adam Stein (@apstein2), Principal of APS Marketing

There no shortage of tech firms that have solutions. Including: @BioCatch, @socureme, @AcuantCorp, @IdentityMind & more. Banks are using them to prevent #fraud. Real-time payments are all the rage in the #banking sector. And that’s a technology ripe for fraud. #IDGTECHtalk –Ben Rothke (@benrothke), Senior Information Security Specialist with Tapad

Still, technology leaves banks more vulnerable to ongoing and advanced security breaches

As banking technology continues to advance, and more people are banking online, the more attention they attract from hackers and the dark web.

Username/password authentication is still the preferred choice. It’s great for attackers. According to @IDC, only 15% of banking customers use multi-factor authentication. Passwords are one of the weakest links in #infosec. All that leaves huge vulnerabilities. #IDGTECHtalk –Ben Rothke (@benrothke), Senior Information Security Specialist with Tapad

Smaller financial institutions are particularly vulnerable, as they lack the resources to keep up with the hackers’ developments, to educate their customers, or enforce proper security policies.

With more features, such as mobile banking, there are more attack vectors. Basic user/pass #AuthN isn’t enough and 2FA, when tied to mobile #, is subject to SIM jacking, so inadequate #identity solutions need to be revamped #IDGtechtalk –Mike D. Kail (@mdkail), Chief Technology Officer at Everest

It’s clear that technology is rapidly innovating the banking sector, creating exciting new opportunities for personalization and cross-department flexibility. But adoption can be difficult for institutions and consumers alike, making them vulnerable to ongoing security breaches.

Please join us for the final #IDGTECHtalk Twitter chat of year on Dec 19th at 12pm ET. We will be recapping tech trends from 2019 and looking ahead to a new decade of technology innovation. See you there!