Category Research: Financial Industry Trends
Three of the latest trends in the financial sector in Canada are the adoption of cloud technology, open banking, and conversational banking.
- Conversational banking has become the next big trend in the financial services industry.
- Canadian consumers are demanding personalized offerings as well as a large range of banking features at their fingertips, making it imperative for financial services to adopt "a well-designed conversational AI platform in their business model."
- Apart from answering basic customer queries, "this business model tackles a huge range of financial services industry challenges efficiently. "
- The impact of artificial intelligence on the industry is profound, with most banks (80%) being aware of the potential benefits of AI, according to an OpenText survey.
- Many banks are now planning to deploy solutions enabled by AI, with 75% of respondents at banks with over $100 billion in assets say they're currently implementing AI strategies.
- In 2019, Manulife Bank launched a millennial-focused conversational artificial intelligence solution called MAI.
- A Manulife spokesman told Bank Innovation, "We want to be the best alternative to the big banks [and] focused on the needs of millennial clients."
- Another Canadian bank using technology to power conversational banking is TD Bank.
Adoption Of Cloud Technology
- Traditionally, the financial service industry has been reluctant in adapting "to the cloud computing platform citing various reasons."
- The adoption of cloud technology is becoming more mainstream for financial services companies in Canada with more and more financial service organizations "adopting the cloud to deliver innovation, customization and security to generate a competitive advantage."
- This allows for the generation of a unique competitive advantage through innovation, customization, and security.
- The adoption of cloud technologies will allow financial services companies to have unlimited access to data storage. This enhances data security in companies.
- In 2019, EQ Bank moved its entire core banking system to the cloud. This move is seen favorably by Canadians who see this as EQ Bank challenging the status quo.
- This move is seen as an industry-leading change towards the future of financial services. The senior vice-president and chief information officer of EQ Bank, Dan Dickinson, said, "We are leaving behind the traditional industry approaches of armchair technologies to innovate faster and serve Canadians better, right now."
- The latest move has brought on a better banking experience for customers by reducing the overhead costs and "allowing savings to be passed on to customers."
- Moving the cloud also further strengthens the bank's security foundation by building on Microsoft Azure.
- Open banking refers to "the opening of internal bank customer data and processes to other parties through digital channels."
- Open banking and open API's have transformed the banking industry, with it being seen as a driving force of innovation in the banking industry.
- The concept of open banking is emerging as the potential future of the banking industry, and this trend is beginning to gain traction in Canada.
- This concept has gained traction amidst consumer demands for data privacy, increased convenience, price for value, and transparent consent.
- Nearly 60% of financial service providers have already integrated the open banking model into their business plan.
- The idea behind open banking is to allow "the free exchange of consumer data, processes and other information between providers of financial services."
- Millennials are believed to be a key demographic to drive the adoption of open banking as there is every reason to believe that adoption potential among millennials is higher.