Having been involved in e-Procurement and Accounts Payables transformation for the past 20 years, and working with leading-edge technologies such as Machine Learning (ML) and Artificial Intelligence (AI) I have seen how innovative technologies come and go. I have also seen at first-hand how our AI-powered Accounts Payables transformation can empower our Enterprise clients to effortlessly improve their Accounts Payables. As the CEO of a leading innovative Australian Fintech, however, it is critical for me to review what the future holds.
Not only in terms of the opportunities for SpendConsole to further improve our AI-powered Accounts Payables transformation but also to see where ongoing threats may be. As a result, of this forward-thinking, I have been very fortunate to be invited to speak on the future of technology and to provide media comment.
As a result, I was delighted to be asked by The Global Banking and Finance Review for my opinions on the future of Digital Finance over the next ten years. It gives me the opportunity to reflect on everything I am seeing and have seen. It enables me to be able to share my thoughts with a wider audience and to share what I am seeing at the coalface of innovation. It was challenging to keep the article to less than 1500 words given the variety of evolving technologies that have the extraordinary potential to create dramatic changes in the future of digital finance.
To keep things straightforward for you, we have summarised the article below, but those who have more time available can check out the complete article on my opinions on the future of digital finance.
Table Of Contents
- Digital Finance Is On The Cusp Of A Monumental Shift With AI at Its Core
- The Explosive Rise In Ai
- The Explosive Rise In Digital Currencies
- Central Bank Digital Currencies (CBDCs) Will Be Everywhere
- Instantaneous International Transfers
- Mobile Payments Will Become The Norm
- Escalation Of Financial Crime
- Blurring Lines Between Banking And Technology Leading To Consolidation
Digital finance stands on the brink of a monumental shift and is poised for explosive growth and evolution in the coming decade. This surge is propelled by the swift advancement of new technologies, notably AI, which will gain an additional boost from the imminent leap in computing capabilities brought on by Quantum Computing. These advancements will coincide with shifting consumer patterns. Looking ahead to the next decade, a handful of pivotal elements are set to shape the FinTech landscape. Here are the foremost trends in digital finance I see for the upcoming decade.
The Explosive Rise In AI
AI is swiftly dominating mainstream markets, with its impact on digital finance set to be transformative. It will catalyse a range of significant shifts, and enhance customer experiences. These will boost operational efficiency, and refine risk management.
AI-driven chatbots and virtual financial advisors will offer round-the-clock, personalised support to users. Initially, these tools will handle simpler tasks, providing immediate answers to low-risk questions and assisting users with basic financial choices. As these intelligent systems gather more comprehensive internal data to refine their AI learning models, they will grow more adept. By analysing extensive datasets these bots will deliver customised financial guidance and make more informed investment choices. For internal finance teams, loan risk assessments will become almost instantaneous, and over time, more complex products will benefit from quicker automated decision-making.
Furthermore, AI will be crucial in detecting and preventing fraud, rapidly pinpointing irregularities and security risks in real time, thereby enhancing the safety of digital financial transactions.
We have already seen this in our own experience with Spend Console. For the last three years, we have enhanced our Optical Character Recognition (OCR) models with AI models that have been trained on millions of supplier documents. Our AI-powered OCR can now pinpoint the supplier invoice data with 98% accuracy. This released data can then be automatically matched with internal ERP systems.
The Explosive Rise In Digital Currencies
Since the pandemic, the use of notes and coins has been declining. Many expressed concern about physical cash’s potential for virus transmission. This accelerated the shift to digital payments. As digital wallets and currencies gain popularity, traditional cash transactions are expected to decrease further, leading to enhanced convenience, transparency, and security for both consumers and businesses alike.
Central Bank Digital Currencies (CBDCs)
Currently, 130 countries, representing 98% of the global GDP, are exploring Central Bank Digital Currencies (CBDCs) – e.g. the digital AUD is currently in pilot with Australia’s Central Bank – the RBA. CBDCs are government-issued digital currencies that can be programmed to assist with real-time economic management. Ultimately, they are likely to be linked to individual identities and, in time, with government records. These will tend to raise deeper privacy concerns. CBDCs will be able to target economic policies. For example, varying interest rates can be offered to different age groups to influence saving or spending behaviours. These digital currencies are expected to enhance payment security and significantly impact the global financial landscape, simplifying domestic and international transactions.
Instantaneous International Transfers
Over the past decade, the international banking system has been slow to adapt to the digital landscape. International transactions still take days or weeks to process using outdated and sometimes manual legacy banking systems. However, the emergence of CBDCs and new payment infrastructures, typically supported by blockchain-based technologies, are set to revolutionise international transactions. These advancements will likely make cross-border transactions instantaneous, more secure, and more efficient, significantly cutting the costs associated with doing international business.
Mobile Payments Will Become The Norm
Mobile phone payments will become the global norm, particularly in developing countries. The rising use of smartphones will promote financial inclusion, allowing the 1.4 billion currently unbanked individuals, to engage in the global economy. This shift will open up numerous new opportunities and empower previously marginalised populations.
Escalation Of Financial Crime
With the rise of digital financial transactions, financial crime including payment fraud is expected to increase exponentially. Cybercriminals are quickly adapting, using their newfound AI tools to enhance the effectiveness of scam emails, and even employing voice-cloning technology to deliver fake audio calls. As a result, the battle against such crimes will continually evolve, with AI-driven security measures becoming an increasingly crucial first line of defence to pinpoint exceptional behaviour that is out of the norm.
Blurring Lines Between Banking And Technology
The distinction between banking and technology will become increasingly blurred. Banks are evolving into technology companies, using AI, blockchain, and digital technologies to offer innovative financial services. Meanwhile, tech companies would relish the idea of tapping into their massive retail customer bases to offer banking services. This trend was first evident in 2019 with Facebook’s effort to launch the global digital currency, Diem, which faced numerous regulatory hurdles. The banking sector is also set to experience consolidation due to the varying responses already being seen by the notoriously conservative sector. Banks that fail to adopt new technologies will struggle, leading to failures and takeovers, while those that are effectively leveraging technology are likely to succeed in this continuously evolving landscape.
International Regulatory Cooperation
International regulators will increasingly collaborate to combat cybersecurity threats and will work closely together to establish global standards for regulation and compliance control. In an interconnected digital world, unified efforts are vital to safeguarding the entire financial system and the data of all those involved.
The future of digital finance promises a dynamic and transformative landscape, driven by the ever-increasing power of AI. As digital currencies, CBDCs, instantaneous international transfers, mobile payments, and increased financial inclusion take centre stage, the role of AI will become even more critical in ensuring security, efficiency, and innovation.
We welcome so many of these advancements as they will help us all transform International business. All the above forces will help make transactions easier and more secure – a welcome relief to all involved. These changes will help us to further capitalise on all the hard work that we have already undertaken with our proven AI models to transform Accounts Payables.
To thrive in this evolving landscape, all companies, financial institutions and fintechs need to positively embrace this dramatic change. There will be a raft of opportunities for smoother international business in a financial ecosystem that is more accessible, secure, and integrated, benefiting consumers and businesses alike.