Reinventing financial services

The future of financial services means reinventing how institutions operate to be faster, more transparent and cost effective. Technology has an enormous role to play in transforming processes to deliver the highest possible value to clients. By leveraging artificial intelligence (AI) and distributed ledger technology (DLT), financial institutions are the on brink of a new horizon in solution development and delivery. Momentum is also underway in the area of Central Bank Digital Currencies (CBDCs), which have the potential to increase the speed, security and reliability of transactions.

Revisiting the way these institutions approach everything from cross-border payments to currency risk is giving businesses greater access to the solutions they need to succeed in a globalised business environment. At our recent Financial Institutions Conference, we brought together industry leaders to discuss the latest technological developments, including:

Automation and AI

AI is proving a remarkable boon for efficiency and transparency, as well as innovation for a better and more personalised customer experience.

• AI based on Large Language Models has rapidly advanced and is opening up an entirely new landscape of opportunities for businesses to digitalise at scale.
• Predictive AI is being adopted by businesses to better process and analyse data; HSBC’s AI Markets is a strong example, which uses a natural language interface to provide customers with a comprehensive view of global markets as well as enable them to access financial services more easily.
• Generative AI is providing businesses have an entirely new way to obtain and action on insights, the potential of which is just being discovered.
• Customers are increasingly expecting payment services to be faster as well as transaction data to be available within a shorter timeframe for better decision making.
• Through AI, data visualisation and other powerful automated functions, tasks that previously took significant blocks of time can now be completed in a matter of minutes.

Digital currencies and DLT

CBDCs and the underlying DLT technology that supports them are being explored to simplify transactions and deliver benefits through a range of financial applications.

• Financial institutions are working together with governments on pilot projects such as Project mBridge, which is designed to explore the applications of digital currencies in cross border payment contexts.
• CBDCs have the potential to improve payment speeds and make them more transparent by embedding key information that could circumvent the time spent tracking the details of a given transaction.
• Digital currencies come with their own concerns which should be accounted for, including currency risk, commercial risk and counterparty risk.

Cross-border payments

Faster and more innovative cross-border payment services are emerging, but joint efforts are needed to drive further progress as the industry evolves.

• The cross-border payment ecosystem involves banks, regulators and various parties, adding a layer of complexity to transactions when compared to domestic payments.
• The rapid pace of technology development, especially from FinTechs entering the industry, is encouraging faster and even real-time cross-border payment services.
• This disruption highlights the importance of collaboration within the traditional banking industry, to improve the customer experience and meet the regulatory requirements for risk control.

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