Four Financial Technology Trends to Watch in 2016

At a Glance

  • The technology behind driverless cars, Blockchain and messaging apps will find its way into finance this year.

2016 has certainly started off with a bang with increased volatility and uncertainty of future demand.  It’s hard to focus let alone think about key technology enablers for 2016 in the face of the macroeconomic events.  But with uncertainty, comes new opportunity for innovation.

Last year, I wrote about the importance of customer experience, security, democratization (of technology), and data science.  Like most technology themes, it takes more than a year to fully implement and optimize enabled business value, and those 2015 highlighted themes are no different.  As we look ahead to 2016, one theme remains on the list with security and the increased scope of compliance.

One noteworthy trend that continues to expand is mobility.  Much has been written over the years around the need for a new mindset of mobile platforms and designing first for mobile.  While not a new theme, 2016 is projected to be the first year since mobile platforms were introduced where CMEGroup.com will have more than 50 percent of its traffic from mobile platforms.  Just like security, mobile is going to continue as a critical, global theme and one that will accelerate in lock step with accelerating innovation in mobile platforms.

 

Security and Compliance – Last year, I wrote that we’re in an increasingly insecure world when it comes to technology.  Unfortunately, that hasn’t changed and if anything, has continued its trajectory.  CME Group continues to focus on its own technology and infrastructure along with continued maturity of the broader connected ecosystems.

Many new technologies are being introduced that enhance security with new integrated machine learning techniques.  I talk about machine learning further below, and it’s exciting to see new combinatorial innovations being driven.  As an example, CME Ventures invested in Fortscale.  Fortscale uses machine learning for user behavior analysis.  I expect to see continued, especially combinatorial, innovation to further enhance security and compliance at financial firms.

 

Ledger Technology – How could I write about 2016 without referencing blockchain and distributed ledger technology?  While many became skeptical of the hype cycle that encircled all things ledger-based,  I see tremendous opportunity for enhanced efficiency and the enablement of new capabilities.

Firms should not look at ledger technology for its own sake, but in the context of use cases and solving broader ecosystem problems.  For example,  CME Ventures invested in Digital Asset Holdings who is focusing on syndicated loans as their first set of use cases.  There’s no doubt this too is a long-term theme that will see continued innovation and course corrections for the coming years.

 

Productivity and Collaboration Tools – 2016 will be the year exciting tools like Jive, Slack, and Yammer become enterprise hardened and available for use in compliance-focused firms.  Facebook is also focusing its priorities on the application of its technology for the enterprise.  As an industry, finance has long been focused on email as a means for communication and collaboration.  I think we all agree any form of communication dependent on using capital letters to display emotion is likely not an optimal collaboration forum.

I see many use cases that can be solved with the new breed of collaboration software.  If you’re not already looking at next generation tools, you may find yourself quickly feeling like you’re using an Apple Newton.  More importantly, increasingly your colleagues will be looking to leverage these next generation tools and prospective hires will be measuring firms by this capability.

 

Machine Learning – Last year I wrote about data science as an emerging technology with machine and deep learning.  The underlying technology and applicable use cases are exploding where 2016 could be the year commercial, externally-facing applications with machine learning start to emerge in the financial services industry.  CME Ventures has invested in Spark Cognition and Nervana who both provide very exciting platforms.  Between driverless cars and the need for greater automated monitoring, it’s clear machine learning is here to stay.

2015 was a year of many exciting technology innovations, and we don’t see a slowdown in 2016. These are a few technology themes to keep in mind in the months ahead.

Ari Studnitzer is Managing Director of Architecture and Product Management in the Technology division at CME Group.

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