Emerging technology: hot utility or just hype?

In a recent report, ‘The Top Emerging Technologies in Banking in 2022‘, financial services research firm Forrester identified the banking industry’s adoption of emerging technologies, bucketing them into what is hot, on the radar and hype.

These categories are based on how banks are planning to prioritise their technology investments in 2022. For example, ‘hot’ technologies are high priorities generating both interest and planned spend in the coming year. At the other end of the spectrum, ‘hype’ technologies are those that have a lot of buzz but no budget.

In the ‘hot’ bucket sits, unsurprisingly, artificial intelligence (AI), specifically in areas like machine learning, computer vision and natural language processing. Machine learning and real-time/predictive analytics are seeing the highest levels of investment in the ‘hot’ list, according to Forrester research, whereas the rest – including 5G and microservices architectures – are seeing moderate investment.

More sophisticated AI applications, such as deep learning, natural language generation and AI-powered robotic process automation, sit in the ‘on the radar’ bucket because the technology is still evolving, as is the regulatory environment to allow specific applications for example in risk management. More than a third of the banks surveyed also identified lack of technology skills and experience in-house as a challenge to greater adoption, according to Forrester

Augmented reality, blockchain and low-/no-code development platforms also sit within the ‘on the radar’ grouping, as does data mesh and service mesh. Instead of centralising data in a data lake, the concept of a data mesh is a decentralised approach that keeps data where it is and enables domain teams to perform cross-domain data analysis on their own. A service mesh is a way to control how different parts of an application share data with one another.

The ‘hype’ bucket contains those emerging technologies that aren’t yet mature enough for “banking prime time”, according to Forrester. These include advanced gamification, edge computing (processing data closer to the source), Internet of Things (machine-to-machine transactions), metaverse and green technologies.

Quantum computing also makes an appearance in the hype list. In our cover story for June, Liz Lumley explores why quantum is gaining so much attention from the financial services sector. She looks at the maturity of quantum computing at global banks and how far we are to quantum supremacy. She also gets into the details of research, specific use cases and business opportunities with the likes of HSBC, Wells Fargo, CaixaBank, Mastercard and IBM. They are exploring areas such as portfolio optimisation and simulations, credit scoring and asset allocation, as well as cyber security risk.

For example, HSBC recently signed a three-year deal with IBM, allowing the bank to embark on a series of experiments to develop use cases for quantum computing in financial services. The bank will explore the use of quantum computing for pricing and portfolio optimisation to advance its net-zero goals and mitigate risks, including identifying and addressing fraudulent activity.

Importantly, banks will need to upskill their workforce to be ready for a quantum future. For those banks sitting on the sidelines, now is the time to get into the quantum game.

Read the cover feature ‘Quantum: here, there and everywhere’ on June 1.

Joy Macknight is editor of The Banker. Follow her on Twitter @joymacknight

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