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Preparing for the Future of FinTech

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Veröffentlicht am Mittwoch, den 04. März 2020

Prof. Gilbert Fridgen who leads the FINATRAX research group at SnT speaks with us about the challenges the financial service companies will be confronted to. 

What is the most important thing that financial service providers should account for when planning for the future?

There are many new technologies on the horizon that have the potential to transform the industry, including artificial intelligence (AI), blockchain, the Internet of things, and quantum computing. The potential benefits of implementing such systems are very exciting, but in order to move forward, companies must have an IT set-up that will allow for smooth integration.

Many companies have legacy IT systems that can already be challenging to work with today and will become even more so into the future. Therefore, it is crucial to transform their IT to be flexible enough to be able to adapt to the changes to come.

How should companies approach this challenge?

It is important to prioritise IT infrastructure if they want to reap the benefits of the new technology that is getting introduced. And by prioritise, I mean being proactive, and also investing in the system properly. There is a tendency to play it safe with IT in the financial sector by building separate systems one at a time. This approach is not going to cut it anymore. Financial services companies need to look at their infrastructure holistically and with a long-term strategy. After all, financial service is an information business.

 How does your research apply to this challenge?

My background is in both managerial economics and computer science, so my research always looks to address topics that need the two perspectives. The latter gives me the ability to understand the capabilities and limitations of the technology, while the former informs my thinking about how to successfully apply them. This means I can keep my work practical, focusing on solutions that could be applicable to the market in the next two years or so, not 15 years.

My work touches on both the IT infrastructure changes that need to happen to support the new technology, as well as developing ways to apply possibly disrupting technologies to the financial services industry, like blockchain and AI. For instance, AI is exciting because it offers the potential for financial service providers to know their online customer, as well as bank advisors, did when personally interacting with their clients some 30 years ago. They can offer individualised services based on data that customers have agreed to share. Developing the AI capabilities to make this possible requires in-depth research and an understanding of both financial services and AI. This is the role I play in the industry.

Prof. Gilbert Fridgen joined SnT in 2020 as the new PayPal-FNR PEARL Chair for Digital Financial Services. Find out more about his research areas here.

This Q&A was originally published in the EU Finance Summit Event Newsletter, read it on that platform here.