Top challenges and IT solutions for financial services providers
The financial services industry faces increasingly complex challenges in today’s digital world. Cybersecurity risks are growing as attackers become more sophisticated. Regulatory compliance requirements are constantly evolving to protect customers. Legacy systems need to be modernized to enable new digital experiences and services. To gain insights, vast amounts of customer and transactional data must be effectively analyzed.
However, new technological solutions are emerging that can help financial institutions overcome these challenges. This article explores the top five challenges financial services providers face and examines promising IT solutions that can help address each issue.
1. Investment banking
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A constant challenge in investment banking is keeping up with constantly changing regulations. New rules for being open, being prepared for problems, and doing business, plus rules from Brexit, mean requirements to follow the law are constantly adjusting.
Solutions using technology and AI are more helpful for this. Tools that examine many papers and agreements and find where rules are not followed can help immensely. Advanced data analysis also allows for the more planned observation and reporting of areas and places. Low-code platforms empower experts and developers to work together to construct compliance apps and improve them continuously for managing policies.
Regulation technology solutions leveraging AI and routines that run themselves are becoming more valuable. Programs like contract checkers and robot auditors can continuously go through vast amounts of documents and pinpoint places that do not follow what the law says. Smart data examination also allows more preparation for observing and informing across divisions and areas covered by different rules. These IT solutions for Financial Services address the ongoing challenge of keeping up with regulations that regularly evolve quickly in investment banking.
2. Asset servicing
One significant challenge for companies that manage assets is having suitable systems to support the growing amount and complexity of financial transactions. As the number of investment options and people involved globally increases, asset managers must process higher volumes of deals with more data in real-time across different countries and time zones.
A practical solution is a cloud computing technology that can easily change based on needs. Rather than extensive, complex programs, cloud-based flexible platforms made of smaller reusable pieces allow scaling up or down quickly as transaction volumes change. They also make sharing data with other companies easier and develop new tools faster by combining building blocks.
Leading asset managers use cloud platforms to create separate apps for tasks like managing reference data, treasury work, and fund accounting. Connecting these apps through application programming interfaces (APIs) provides much-needed flexibility, the ability to adapt, and the ability to handle higher volumes compared to older single-program systems. This helps asset managers better support the growing deal amounts and variety in today’s global financial world.
3. Asset management
One of the significant challenges that companies managing investments face is providing experiences not just for each customer but also for many people. With more competition, customers expect customized investment products, personalized advice, and ways to get help anytime through websites or apps.
Making significant technological changes is essential to solve this challenge. Top investment managers use customer-focused programs connected to customer data and artificial intelligence. These programs get a complete picture of each person by learning about customers’ interests, goals, habits, and actions. AI then helps customize everything for everyone’s needs across online areas, apps, websites, and other ways to get help. Managers can provide tailored products, advice, communications, and types of assistance for each person based on their needs.
4. Wealth management
One ongoing challenge in managing money for people is offering many different investing choices, even though it costs a lot. Clients increasingly want access to all kinds of things, such as stocks, funds, ETFs, unusual investments, and tools to control risks from just one company.
Open tech platforms that can change provide a good solution. Powered by APIs, these platforms let wealth managers quickly add offerings from different outside companies, investment managers, and people making investment plans. This provides a unified experience for clients while avoiding high upfront costs. Advanced tools like robo-advisors also make building and adjusting investment mixes simpler based on each person’s goals and how much risk they want to take.
5. Market infrastructure
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Another challenge at the center of changing how financial markets work is the pressure for systems to connect and use the same rules across borders. As financial markets link together globally more, exchanges, places storing securities information, and other market setups must easily trade with each other no matter where they are located or what technology they use.
New distributed ledger technologies offer a solution. Platforms like Ripple make cross-border payments, foreign exchange settlements, and other processes after trades across different systems possible using a standard digital currency and smart contracts. Developing DLT networks aims to provide a globally connected marketplace for trading, clearing, and settling different investments. This will help increase automating trades from start to finish, tying things together, and making rules the same for systems now that work alone.
Final thoughts
The financial service industry faces many challenges with new technologies, but there are also opportunities to solve problems and improve customer service. Some helpful technologies are artificial intelligence, cloud computing, blockchain, and APIs.
Financial services can use these new ideas intelligently. They can build systems centered on customers. Using platforms that responsibly integrate technologies can help banks adapt to changes, compete better, and create value for the banks and customers.
