In April 2020, Microsoft CEO Satya Nadella noted, “We’ve seen two years’ worth of digital transformation in two months.” Digital transformation in the financial industry has long been underway, but 2020 undoubtedly accelerated activity.

Bank branches and investment offices closed. Trading desks moved to home desks. Market volatility went wild. Consumer behaviors shifted overnight. Financial institutions were forced to quickly adapt and to adopt new technology solutions. And 2021 promises to be interesting as well. (Does anyone remember an uninteresting year?) 

The pace of digital innovation isn’t likely to slow. We expect seven technology trends to impact financial services this year.


Continued Remote Work

As various workplace restrictions remain in place, remote work is one of the most obvious continuing trends. Financial institutions have made massive technology investments to support remote workforces, including collaboration tools and virtual desktops. New ways of working will continue to take shape for at least some portion of the workforce. Going forward, finding the right balance will require firms to weigh many factors such as:

  • Employee recruiting and satisfaction
  • Technology and security challenges
  • Costs of working remotely versus working in an office
  • Changes in business travel and activities
  • Impact (both positive and negative) on productivity and creativity

Firms looking to extend remote working options will likely want to review their remote collaboration and security technologies, which may have been adopted under pressure and may be less than optimal. 

Pure VDI solutions can help ensure your virtual desktop solution is fast, resilient, simple-to-manage, and easily scalable. 


Advances in AI and ML 

In 2020, artificial intelligence (AI) and machine learning (ML) transitioned from cool to vital. Where previously, most organizations used AI and ML only for peripheral functions such as chatbots, they are now key to mainstream productivity and revenue drivers. Advances have enabled financial institutions to leverage AI to handle sensitive financial transactions, end-to-end customer activities such as investing and lending, and critical functions such as trade decision-making and fraud detection. Businesswire reports that global AI in the fintech market was estimated at US$6.67 billion in 2019 and is expected to reach US$22.6 billion by 2025. While these technologies have been steadily advancing, legacy financial institutions have not kept up with their digital-native competitors in the fintech and Big Tech space. Perhaps this acceleration will help level the playing field. 

See how smarter infrastructure for AI can help you simplify operations and speed insights.


Increase in Cyberattacks and Ransomware

Even with all of our binge-watching in 2020, it was nearly impossible to miss the increase in ransomware attacks over the last year. Many were public, costly, and embarrassing. Cybersecurity firm Arctic Wolf noted a 520% increase in phishing and ransomware attacks targeting financial organizations between March and June of 2020. Financial firms may be particularly good targets because attackers understand the value of both your data and your reputation. Of course, some of the increase in attacks is due to the sudden move to work-from-home, with less secure networks, equipment, and processes. But ransomware has also become a lucrative and sophisticated industry. Established players are even selling ransomware-as-a-service options. Be prepared for attacks to continue in 2021. 

Find out how you can protect your business from ransomware and take our ransomware assessment.


Higher Bar for Digital Experiences

The demand for digital experiences has spiked, especially as the financial industry looks to attract and retain users who expect a personalized, omnichannel, all-mobile, all-the-time experience. As the pandemic has accelerated digitization, increased demand for more and better digital experiences will certainly lead to winners and losers based on technological differentiation. Make sure you have the right technologies and infrastructure to enable the speed, security, agility, and mobility required to remain competitive.


More and More Data

The adoption of AI, Internet of Things (IoT), and automation continue to become more widespread. With the right infrastructure, you can leverage the massive quantities of data they generate to further enrich AI, investment decisions, and more. However, many financial firms have found it challenging to store, secure, access, and analyze these massive quantities of data. 

For example, investment management firm Man AHL develops computer models to make investment decisions. Its legacy storage architecture couldn’t support developers and quantitative researchers who needed to create and execute these models. With a data hub built on Pure Storage® FlashBlade®, the firm was able to deliver the massive data throughput and scalability needed for even the most demanding simulation applications with 10x–20x processing improvement. Harnessing the power of exponential data growth is not only a technology challenge but also a DevOps and people challenge, especially as competition for scarce data science and AI expertise intensifies. (More on that later.)


Continued Democratization of the Markets

In 2020, more Americans started investing in the markets due to the uncertainty, employment turmoil, and lockdown boredom. Individual investor participation grew to an average daily volume of 11 billion shares, making up 20% to 25% of market share. This increase in retail trading is expected to continue in 2021, driven in part by longer-term trends such as the electronification of markets and automated trading technologies that enable greater efficiencies and lower transaction costs. New product offerings, robo-advisory, and zero-commission trading from both traditional online brokers such as TD Ameritrade, Fidelity, and Schwab, and disruptive platforms like Robinhood, are also attracting new investors. 


RegTech to the Rescue

The return to a Democratic administration in the U.S. hints at an increase in regulatory enforcement actions. Meanwhile, Brexit potentially adds complexity to global regulations. At the same time, regulatory technology (RegTech) has hit the mainstream. MarketsandMarkets estimates that the global RegTech market will grow from US$6.3 billion in 2020 to US$16 billion by 2025. In 2021, expect to see financial firms continue to invest in compliance technology utilizing AI, ML, and natural language processing (NLP) to enable automated trade monitoring, compliance obligation tracking, and regulatory reporting. Regulators have joined the party, too, utilizing RegTech for market surveillance and implementing sandboxes to support innovation. 

More Predictions 

An unexpected offshoot of the 2020 disruption in financial services may be a generation of entrepreneurs looking to fill the gap left by technologies and processes that just didn’t work when the world turned on its head. McKinsey reports “a veritable flood of new small businesses” with more than 1.5 million new business applications in the United States in the third quarter of 2020 alone. That’s almost twice as many as in the same period in 2019 based on data from the U.S. Census Bureau. If this trend continues, the demand for talent mentioned above may be exacerbated as the best and brightest look to bring their own innovations to the market. 

Other trends that will continue to have an impact in 2021 include:

  • Decentralized finance (DeFi)
  • Cryptocurrency and Stablecoin
  • Hybrid cloud and multicloud
  • The continued move to on-demand models with everything-as-a-service

Given the acceleration of digital innovation we saw in 2020, it’s safe to say that 2021 will not be a return to 2019. In fact, expect this to be a year of transition to a new normal. With the rapid acceleration of digital innovation we’ve seen in the last 12 months, it should be a very interesting new normal.