Be cognizant of AI’s limitations. Concerns include ethical considerations and algorithm bias.
Financial services outlook key takeaways
The increased use of fintech apps highlights the importance of hyper-personalization.
The SEC’s proposed rules on outsourcing and cybersecurity are inextricably linked.
Financial services trend #1: AI is revolutionizing the financial institutions space
Outlook
The future of banking: How AI is revolutionizing operations
Artificial intelligence tools are rapidly shifting the landscape in numerous industries, including the financial institutions space.
Artificial intelligence tools are rapidly shifting the landscape in numerous industries, including the financial institutions space. The hype around these technologies may have some organizations prepared to run full speed toward implementing them across the entire business, but four areas stand out as transformational opportunities for financial institutions.
Loan application processing, compliance and risk management, fraud detection, and customer service each tends to depend heavily on human capital. AI will not only streamline those areas and create operational efficiencies, but also help free up those employees to focus on higher-value responsibilities, which will further promote a successful organizational culture and aid employee retention.
Financial services trend #2: Hyper-personalization of financial services products is changing the game
Financial products are often built for the average user—not for a specific individual. This often leads to products that are adequate but fail to delight customers. Fintech companies are changing the approach by working to solve specific issues faced by niche communities. The hyper-personalization of services is another way the fintech movement could affect how traditional financial services respond to changing consumer preferences.
Outlook
The genie is out: Hyper-personalization of financial services products is in
The hyper-personalization of financial services is another way fintechs could affect how traditional companies respond to consumer preferences.
Financial services trend #3: Regulatory and policy changes are now part of business as usual
Outlook
Upping the regulatory ante for asset managers
The SEC has proposed a rule on registered investment advisers’ use of service providers and rules to strengthen advisers' cybersecurity practices.
As outsourcing options proliferate, many organizations are increasing the depth and breadth of their use of third-party service providers. For asset management firms, using third-party providers can free them up to focus on their core competency of working directly with their clients and managing assets.
Almost every function that a registered investment adviser performs can be outsourced, which means that many of the internal controls and processes used to conduct their business and comply with contract requirements and regulations now reside outside their purview.
Financial services trend #4: Reinsurance industry faces volatility
The reinsurance sector is grappling with a host of negative forces that have led to considerable volatility in the market. As June renewals approach, insurers are seeking ways to weather this storm and adapt to the changing landscape.
Since fall 2022, reinsurance rates have seen a significant increase, and this trend is expected to continue throughout 2023.
Outlook
Navigating the storm: Reinsurance industry faces volatility
The reinsurance sector is grappling with volatility in the market. As June renewals approach, insurers are seeking ways to weather this storm.
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