Page 41 - Banking Finance April 2021

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Additionally, deploying these technologies to manage risk
will require banks to access and use high-quality and timely
data. Without robust data, technology implementation will
likely not be as effective. For some time, financial institutions
have had difficulty providing quality data from the source
through the system. This is due to a historic proliferation of
disparate legacy systems which has limited their ability to
capture, measure and report data. By enhancing their data
architecture, banks could create new data tools and models
that could readily sense and combat emerging risks. Having
better data, for instance, could help banks boost their
monitoring and surveillance tools to detect and predict
instances of employee misconduct (conduct risk). New tools
could also help eliminate silos and empower the business line
to make better risk decisions and allowing them to go from
hindsight to foresight.
Figure 2.
As the financial industry continues to innovate in various
technological initiatives, there is a slow but steady upsurge Conclusion and way forward:
in blockchain technology adoption and investment because We have seen the banking business model moved from
blockchain allows for the decentralization of data storage. manual to ALPM (Automated ledger posting machines),
That means there will be safer transactions and greater from ALPM to IBS and from IBS to CBS. A new wave of
asset transparency. disruption more forceful and more pervasive than what we
have seen in recent years will likely unfold in the next decade.
The World Economic Forum predicts that the financial sector While the roots of this disruption viz. technological,
will increasingly experiment with hybrid blockchain models, economic, geopolitical, demographic may remain the same,
while the public sector will increase its use of smart the unique convergence of these factors should unleash
contracts. Financial firms are currently in various stages of unprecedented change in the broader society, economy
blockchain implementation. According to PwC data from consequently, in the banking industry as well.
June 2019, when global financial institutions were asked
about the implementation of emerging technology like The above threat really gives lots of opportunities to
blockchain and AI, 37% of them said they had fintech-based enhance the bottom line with technological initiatives in
products or services available to their customers. More than every parlance of banking say it payment, lending,
a fifth (22%) of these companies said they had products or mobilization of leads, card distribution with a necessary tie
services in the pilot stage. with fintechs, which should necessarily aim at two important
aspects i.e. customer satisfaction and profit enhancement.

Hence, there is an urgent need for banks to excel at data
management, modernize core infrastructure, embrace
artificial intelligence (AI) and migrate to the cloud. However,
most banks are far from where they'd like to be in their
digital transformation. Despite an increase in new
technology investment in recent years, this trend is expected
to continue in the foreseeable future. For instance, in 2022,
North American banks are expected to spend nearly one-
half of their total information technology (IT) budget on new
technology while European banks would spend about one-
third, a figure higher than the current level (27 per cent),

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