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Trends in banking industry

For many banks the thought of integrating modern technologies feels like a minefield. Claudia Hauser, EMEA financial services lead at Microsoft, believes that financial institutions need to proactively embrace technological innovation. As the market becomes more transparent, customers are using online price-comparison services to shop around. The digital revolution has also given customers the option to seek other businesses if their current providers do not offer services on multiple channels. Banks are creating user-centric experiences for customers to differentiate each other from the competition (smartbanking solutions). However, this is still a challenge for most financial institutions.  A recent survey reported that 53% of millennials in the U.S. do not see any difference between banks. Anytime, anywhere banking is essential, but it is also the norm.

There is a lack of “human touch” between banks and their customers, and this is one of the reasons why people only visit a branch when they have to, and their relationship to banks is mostly transactional. Fintech companies like Venmo and Sqaure Cash are serious competition for banks. These platforms mimic the natural flow of people when it comes to sending money, which banks are unable to do because of legal regulations and obsolete IT structures.  However, these fintech companies can only provide bank-like services but not a complete holistic financial model.

Banks can offer great help to their customers by providing personalized feedback based on their spending habits and offer smartbanking tools. In today’s technologically oriented culture, the opportunities for banks to integrate this information are endless. Banks are in the enviable position to know every financial touchpoint of their customers, from where they prefer to shop to their credit capacity.

What will the financial world look like in fifty years? Everything will change, except human nature. (Or, nothing will really change.) The financial and banking sector is embracing the new opportunities of emerging technology. Data mining and machine learning platforms, and the rapidly developing world of artificial neural networks, are having significant impacts on the global financial world. Continue reading

Bell Curve

The Social Credit Score and the Bell Curve

The Social Credit Score is a system that China has had in trials for several years, and that uses the principles of credit scoring- data streams from several specific sources- to formulate a predictive score. The current credit score uses data from the past to predict future behavior, and allows financial institutions to evaluate risk. The social credit score is taking this model and enlarging it to fields of interest beyond financial behavior.

Some data sources are going to provide information that has a better predictive value for future behavior than others. And while humans often surprise their families and themselves by going off the rails, some patterns of behavior are bound to be repeated. The social credit score attempts to find the behaviors with the best predictive value, and use these values to determine how well a person functions in society.

With a large population, concerns of governments are the needs of the population. And population dynamics are different from tribal, family, or individual dynamics. As the world population grows and human society becomes more complex, we will be facing new challenges. We will be living in significantly denser social groups, for instance. Policy decisions will be made for the good of the entire group, and it is believed by those making these plans and decisions that the populations as a whole will be best served if everyone toes the line.

Toe the line. Follow the rules. Do what you are supposed to do. If you screw up, it goes on your permanent record. Very permanent. People can check your score. Employers, landlords, parents of the person you want to marry. Continue reading