Business advisory firm Gartner has released a new report that identifies the top three technology trends for banking and investment services firms worldwide in 2022.
The company says generative artificial intelligence (AI), autonomic systems and privacy-enhancing computation are gaining traction in banking and investment services, and Gartner expects they will continue to grow over the next two to three years.
Gartner VP Analyst, Moutusi Sau, says that while growth is the top priority, managing risk, optimising costs, and increasing efficiency require new technology innovations.
“Generative AI enables bank CIOs to offer technology solutions to the business in pursuit of revenue growth, while autonomic systems and privacy-enhancing computation are long-term solutions that provide new options for business transformation in financial services,” she says.
Gartner predicts that 20% of all test data for consumer-facing use cases will be synthetically generated by 2025. Generative AI learns a digital representation of artifacts from data and generates innovative new creations like the original but do not repeat it.
The report says in banking and investment services, generative adversarial networks (GANs) and natural language generation (NLG) can be found in most scenarios for fraud detection, trading prediction, synthetic data generation and risk factor modelling.
Gartner says autonomic systems are self-managed physical or software systems that learn from their environments and modify their own algorithms in real-time to optimise their behaviour in complex ecosystems. They create an agile set of technology capabilities that support new requirements and situations, optimise performance and defend against attacks without human intervention.
The report says autonomic systems are currently mostly software-based in the banking context. However, humanoid robots are emerging in smart branches that are examples of hardware-based autonomous systems that cater to clients and customers.
Gartner says the robots could be applied in autonomous debt management, personal finance assistants and automated lending. Roboadvisors are essentially low-level autonomic systems, although there are still trust concerns due to their high level of automation.
The company predicts that by 2024, 20% of organisations that sell autonomic systems or devices will require customers to waive indemnity provisions related to their products' learned behaviour.
Gartner says privacy-enhancing computation (PEC) secures the processing of personal data in untrusted environments, which is increasingly critical due to evolving privacy and data protection laws and growing consumer concerns. It uses various privacy-protection techniques to allow value to be extracted from data while still meeting compliance requirements.
Gartner predicts that 60% of large organisations will use one or more privacy-enhancing computation techniques in analytics, business intelligence or cloud computing by 2025.
The report says that data has an inherent role in any analytics, computing, and data monetisation efforts within financial services. The adoption of PEC is on the rise in use cases like fraud analysis, intelligence operations, data sharing and anti-money-laundering.
Australian financial services
The report also found that IT spending by banking and investment services firms in Australia is forecast to grow 12.7% to $28.4 billion in 2022.
Gartner says the largest category of spending is IT services, which includes consulting and managed services and accounts for 47% of total IT spending in the sector at $13.4 billion. The fastest-growing category is software, with spending forecast to increase by 21% to $6.4 billion.