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How fintech is shaping the future of banking and finance

23 May, 2019Wendy Chowne
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Wendy Chowne explains how cyborgs, artificial intelligence and machine learning are revolutionising the way we bank – and how higher education needs to update the skills it teaches accordingly.

The term ‘cyborg’ conjures up images of The Terminator franchise – a war which pits humans against machines and networks that have developed intelligence and thinking capabilities.

Cyborg is a term coined in the 1960s which combined ‘organism’ with ‘cyber’. Today our view of cyborg has broadened. In theory, it could apply to those who have enhanced abilities due to robotic implants or wearable technologies.

As science fiction has progressed, so too has technology in the financial services arena – in particular with the use of cyber technologies. These include web-based and networking technologies, security mechanisms as well as artificial intelligence and machine learning.

‘Artificial intelligence’ (AI) refers to intelligent machines which can work and react like humans, for example through speech recognition and reasoning.

‘Machine learning’ (ML) is an application of AI where machines are given the ability to learn and improve from experience without explicit directions.

How is technology changing the financial industry?

Fintech innovations are manifold and increasing. Voice and facial recognition enables access to bank accounts. Apps enable notifications to customers of transactions and a personalised analysis of their spending habits.  

‘Open banking’ is a new e-service which extends this capability, allowing customers to compare the financial deals they are getting with other providers.

Blockchain technology, robo-advisors, wealthtech and mobile payment technologies – such as Apple Pay and Pingit – are all changing the way financial institutions interact with customers.

Customers of Mitsubishi UFJ Financial Group benefit from a humanoid robot employee which speaks 19 languages. Its use and interpretation of fast data enables it to direct the customer to the correct staff member and provide answers to basic enquiries. That’s AI in action.  

How are banking and finance skills changing?

According to Autonomous Research over $1trn of the current financial services cost structure could be replaced by AI and ML by 2030.

New skills are needed for existing and prospective employees and the European Union is working to provide the workforce with the requisite skills to meet new technological demands.  Without action there is clearly a risk of an exponential skills gap.

 

How should higher education respond to the technology revolution?

The World Economic Forum’s research has divided worker skills into five broad categories:

  • physical and manual
  • basic cognitive
  • higher cognitive
  • social and emotional
  • and technological.

It is predicted that by 2020, technology will replace many of the first two categories. And those in the higher cognitive will need to retrain and learn to work with AI. However, those with skill sets in the final two categories will be in demand.

It makes sense for education to enable the acquisition of skills necessary for a working life – creativity, emotional awareness and problem-solving. It makes sense to encourage students to be curious about technology and adaptive.

Our students are studying programmes which address new technological skills, meet employers’ needs and progress technological change to add value to organisations.

Through a variety of assessment mechanisms, we aim to meet the demand for new ways of communicating and evidencing these skills and competencies.

Core content continues. Students learn about the theories of change management but also skills like coding, workplace technology-based tools, and contemporary financial innovations.

Students study Fintech so they are aware of emerging developments within the industry. And our visiting Professor of Fintech and Innovation, Renier Lemmens, helps maintain our focus.

 What are the challenges the industry faces?

Skynet might now be seen as the hero rather than the villain. The name was adopted, perhaps ironically, by a UK-based satellite communications system.

Cyborgs, AI and ML are here to stay, and will continue to evolve.  The challenge for organisations and individuals within the financial services industry is to anticipate the impact of their progress and harness their capabilities.