The blockchain technology and A.I-based financial applications have quickly become the main source of interest of banks and major financial institutions globally. Recent studies and research demonstrate that the increasing demand for the blockchain technology may have been developed due to the banks’ fear of fintech and emerging innovative services.
According to the 2016 World Retail Banking Report, around 62% of young adults are using fintech products and services instead of traditional bank accounts and services. More interestingly, young adults have also showed their disapproval of traditional banking services, as the majority of the surveyed millennials stated that they don’t plan to stay with their banks or payment platforms in the near future.
The 2016 World Retail Banking Report is a solid evidence which shows this generation’s clear preference of innovative financial services and products over banks, due to their enhanced efficiency and low costs.
As a response, banks have begun to establish research centers and fintech development groups since early 2015 to develop and create their own innovative fintech and applications for their existing customers.
Some banks have focused on the development of payment networks, while others geared towards the development of distributed cross-network of banks, which enable institutions to settle cross-border and cross-network transactions with low costs.
These platforms, which are based on the blockchain technology, have been adopted by many of the world’s leading banks, most notably by major institutions in part of the R3 consortium. Although the blockchain technology has shown its potential in the industry of trade finance and settlement between banks, it is yet to provide actual applications for customers to utilize.
Recognizing banks’ inability to deal with blockchain in the development of consumer-focused applications, some financial institutions have begun to kickstart the development of A.I-based financial platforms, with which consumers can conduct various financial operations and settlements with an autonomous device.
For instance, some institutions have adopted a technology known as machine learning, which operate on algorithms to spot suspicious transactions and to respond to customers autonomously, without the presence of and help from human employees.
With banks eyeing the blockchain technology and A.I, the financial industry is expected to undergo a major reconstruction over the next few years.