The Future of Automation in Finance: Trends and Predictions
July 7, 2023

The finance industry is in the midst of an extraordinary transformation, fueled by rapid technological advancements. One of the key driving forces behind this revolution is automation, which is fundamentally reshaping how financial tasks are executed and redefining the overall financial landscape. With its ability to streamline processes, boost efficiency, and elevate customer experiences, automation is unlocking immense potential for the future of finance. Let’s delve into the latest trends and predictions surrounding automation within the finance sector.

Workload Automation Industry in Finance Will Grow

The automation of tasks is becoming increasingly important in the finance industry. Workload automation (WLA) is projected to experience substantial growth, with the global market expected to grow at a compound annual rate of 6.5% from 2020 to 2027. The banking, financial services, and insurance (BFSI) sector, in particular, is anticipated to increase its share in the automation market from 20% to 25% by 2027. Finance executives are realising the benefits of automating general accounting operations, allowing them to focus on value-added tasks such as data analytics to drive decision-making and gain a competitive edge.

Chatbots Will Be Fine-Tuned for Use in Finance

Chatbots have become valuable tools in the financial services industry, offering benefits such as improved processes, reduced costs, increased sales, and enhanced customer satisfaction. Insurance firms can use chatbots for policy management and claims processing automation, while banks can leverage them for lead generation and customer service. Tata Mutual Fund is already using an intelligent virtual assistant, automating 90% of client inquiries and reducing workload. Investments in chatbot technology in the finance sector are expected to drive improvements, making them more human-like in interactions. The North American Chatbot Market is projected to exceed $224.9 million by 2030, with the finance sector playing a significant role in its growth.

Powerful AI Will Facilitate Financial Automation

AI technology is revolutionising the financial sector through automation, enhancing risk analysis, and optimising processes. Crest Financial, a US leasing company, has experienced significant improvements in risk analysis by employing AI on the Amazon Web Services platform. Integration of AI-driven automation, such as robotic process automation (RPA) and intelligent character recognition (ICR), streamlines tasks like data verification, report generation, document review, and information extraction from forms. This automation eliminates errors and reduces operational costs.  A report from Ernst & Young reporting quoted a 50%–70% cost reduction through RPA implementation.

Blockchain Technology Will Be More Commonly Used in Finance

Blockchain technology is revolutionising the finance sector with its enhanced transparency, improved security, and lower transaction costs. Currently, cross-border transactions take 2 to 7 days and incur an average cost of 6.94% when sending $200 between countries. However, according to Jupiter Research, the adoption of blockchain has the potential to save over $27 billion in cross-border settlement transactions by 2030, resulting in cost reductions exceeding 11%. Blockchain enables fast and secure domestic and cross-border transactions, real-time settlement, and digitised KYC and AML authentication. By harnessing these benefits, blockchain has the power to transform the current system, reducing fees and promoting financial inclusion globally.

Blockchain also extends beyond finance, streamlining processes in insurance through smart contracts and enabling advanced asset monitoring through integration with the IoT. Non-Fungible Tokens (NFTs) and platforms like Bitcoin and Stacks provide new avenues for trading fashion, gaming items, and music. Furthermore, the integration of blockchain with central bank digital currencies (CBDCs) enhances their functionality and efficiency. The overall adoption of blockchain promises greater efficiency, lower costs, and increased innovation in finance.

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