The finance realm is swiftly changing, influenced by technological progress and shifts in consumer habits.
As society progresses into the digital era, various new developments transform the financial services sector. This piece will delve into five crucial digital finance trends readers should know about.
Tokenized Assets and Stablecoins
One significant industry trend today involves the shift towards tokenized assets as a key focus area.
Over the past year, financial institutions have shown increased interest over the past year in exploring “crypto rails” and the possibilities of blockchain technology, rather than just cryptocurrencies such as Bitcoin. A notable use case for tokenization that the industry is adopting is stablecoins.
“Financial institutions are keen on tokenizing current assets,” Michael elaborated. “The stablecoin and tokenized money scenario is emerging, with major players entering this market.”
Paypal and companies like Visa and Worldpay recently introduced their new on-chain stablecoin, PYUSD, denominated in dollars. This stablecoin is fully backed by U.S. dollar deposits, showcasing the versatility provided by tokenization technology.
Digital and Mobile Banking
The digital and mobile-centric future of finance is driven by growing consumer demand for digital banking services, sparking numerous technological advancements within financial institutions.
Artificial intelligence (AI) plays a central role in these digital transformations. The emergence of banking-as-a-service (BaaS) further expands digital services as traditional banks open their application programming interfaces (APIs) for fintech and third-party app development.
Digital and mobile banking will continue to rise in popularity, encompassing activities from budget inquiries to report generation. In the future, intelligent agents will anticipate and proactively deliver an individual’s business information needs.
Eventually, visually rich and easily accessible information will replace data in spreadsheets. In the evolving landscape of digital finance, ensuring accurate tax calculations is crucial for many self-employed individuals who make use of digital platforms. As more freelancers turn to innovative financial management tools, our recommended taxation tool for freelancers helps navigate the complexities of 1099 income tax responsibilities efficiently.
Artificial Intelligence and Machine Learning
Implementing Artificial Intelligence is poised to become a crucial business function in 2024, driven by hyper-automation. This essentially involves automating any repetitive task that does not require human oversight. In the realm of finance, the upcoming trends in AI and ML include:
- Enhanced client engagement through Conversational AI: The significant growth in successful chatbot interactions, estimated at 3,150%, indicates the continued influence of chatbots on business communication. Conversational AI is expected to elevate chatbots into valuable tools for assisting consumers.
- Rise of the metaverse (Web 3.0): While the metaverse remains somewhat vague, FinTech companies should monitor developments closely. The Metaverse is witnessing exponential growth in Crypto, NFTs, and digital tokens.
Increased Investment in Cybersecurity and Fraud Detection
In light of changing security risks and shifts in customer habits, financial experts are set to boost their technology investments in IT security in 2024.
According to Gartner, a significant 70% of financial purchasers plan to raise their software budgets from the previous year, with a specific emphasis on cybersecurity, data protection, customer relationship management, and IT management software.
Primary investment focuses also include accounting and financial software (34%), marketing tools (26%), and business intelligence software (25%), showcasing a deliberate distribution of resources to meet various requirements and improve operational effectiveness.
Integrations
Another significant development in digital asset management is the growing focus on integration. This shift stems from the aim to establish a unified digital asset repository for maintaining consistency and precision across systems. Integrating with a company’s technology stack enhances team productivity.
The following are some reasons why integration is becoming a notable trend in asset management:
- Centralized asset repository: Integration transforms the DAM into the primary storage for digital assets, ensuring uniform access for all departments and applications.
- Uniformity: Teams can readily retrieve approved digital assets housed within the DAM system.
- Data analysis and insights: Integrated solutions offer valuable information on asset utilization across different systems, aiding in assessing DAM return on investment.
Robo-advisers
Automated investment platforms, robo-advisers, provide personalized financial planning and asset management services through algorithms and AI. These platforms create custom investment portfolios by analyzing extensive data on risk tolerance, financial goals, and market trends.
Tech-savvy investors who prefer digital-first approaches are attracted to robo-advisers. This is due to their lower fees than traditional human advisers. AI-powered solutions are now being utilized in various financial services like:
- Fraud detection
- Credit scoring
- Chatbot-based customer support
Distributed Intelligence
Bringing intelligence closer to the data’s location, powerful edge processing is shifting. Financial institutions will integrate metadata extraction and governance directly into distributed capture points such as smartphones, IoT sensors, and decentralized ledgers.
This on-site preprocessing reduces the load on central repositories and facilitates applications like real-time fraud detection with on-device behavioral analytics. DAM needs to back intelligent processing at both the edge and core with versatile deployment choices and connections to various data origins.
Endnote
Digital Asset Management (DAM) is now a cornerstone for contemporary businesses, empowering teams to handle digital assets in a swiftly evolving environment. Significant trends within the DAM sector are set to greatly impact enhancing operations and ensuring brand uniformity.