"Three Musketeers" of Finance Technology: block chain, digital currency, artificial intelligence
Industry Insights
POSTIME:2017-03-07 10:10:00

"Three Musketeers" of Finance Technology: block chain, digital currency, artificial intelligence


With Blockchain gradually moving from the concept to production, banks and other financial institutions are showing a more positive and adoptive attitude. Digital money use smart contracts to strengthen the Central Bank's financial regulation, the Chinese Central Bank is also actively studying digital currency.  Artificial intelligence is now the current talk of town, but the domestic application of AI to the financial field is still at it infancy.


With the development of Blockchain, Artificial Intelligence, Big data and Cloud technology and other emerging technologies, more applications will be developed and its usage will be expanded.


As the integration of finance and technology deepens, the usage of these technologies to enhance the efficiency of the financial industry will continue to grow exponentially.


Recently, France's largest bank, BNP Paribas announced that their digital transformation plan, is expected to be implemented by 2020; BNP Paribas will invest 3 billion Euros in the field of digital innovation, and through the establishment of more innovative technology products and platforms to attract more customers to increase competitiveness, and achieve total transformation.


In fact, more traditional Commercial Banks began to embrace financial technology.  Data shows that in 2015, up to 19.1 billion US dollars of investments were made into the field of finance technology; and this is expected to reach 30 billion USD in 2016, an increase of 57%.  The merging of Technology and Finance has effected change in traditional financial models. Amongst this, Blockchain, digital currency and the development and application of Artificial Intelligence has accelerated the transition out of traditional finance.


Blockchain From "Hate" begets "Love"


In recent years, the status of the Blockchain has been significantly improved. In the beginning, Blockchain was not favored by the Finance industry, however, as the decentralization and high transparency advantages begin to surface, , the traditional Finance industry begun to embrace this technology.


In September 2016, the United Kingdom’s Barclays Bank completed the world's first trade in the use of Blockchain technology settlement, settlement took less than 4 hours, which is much faster than the usual 7 days to 10 days.  The advantages of Blockchain far exceeds that of traditional paper based transactions.


Today, several Blockchain Technology alliances have gathered considerable size.  Recently, more than 30 companies, including JPMorgan Chase, Microsoft, Accenture, UBS and Credit Suisse Group, have formed a new Blockchain technology alliance called the Enterprise's Ethereum Alliance (EEA) to jointly develop new standards and technologies, So that enterprises can make it easier to use the APF block.


In addition, Hyperledger, led by the Linux Foundation, has 11 new members, including three Chinese companies.  While the American R3CEV syndicate, which is focused on the development of Blockchain technology for the Finance industry for the financial sector, currently has about 70 financial enterprises involved.  In August 2016, the R3CEV syndicate stated that 15 of its affiliated banks had joined a trade finance trial to test a distributed ledger called Corda.


One of the reasons why Blockchain technology is being sought after is that the technology can help financial institutions cut costs.  Data shows that Blockchain technology can save about $ 8 billion to $ 12 billion in infrastructure costs per year, accounting for 30% of the total cost for the top 10 banks in the United States.


In China, the blockchain has been written into the "13th Five-Year" National Informatization Program," which provides strong policy support for the development of blockchain technology.  Ant Finance (Alibaba), Wechat bank and Ping An Insurance are some of the Chinese enterprises actively testing the Blockchain technology.


There are industry insiders say that China's Financial service enterprises are not vulnerable to outdated systems and technology constraints, have a stronger competitive advantage, and China's financial services market infrastructure size and high degree of integration will become a strong mover of Blockchain technology development.


IBM's global head of financial markets in London said that for the Blockchain, 2016 is a "proof of concept" year, and 2017 will be a year of action.


The development of digital money is in full swing


As we all know, Blockchain technology is the underlying technology of Bitcoin, after years of development, the market price of Bitcoins in recent years is soaring. Bitcoin’s popularity lies in its decentralization and its non-reliance on third-party issuers and characteristics of the transaction.


It is worth noting that digital currency represented by Bitcoin has been receiving much attention in recent years.


August 2016, UBS, Deutsche Bank, Santander and New York Mellon Bank, the world's four major banks have announced that they will jointly develop new digital currency, with a view to the future that Blockchain technology can be used in settlements and become a global Industry standard among Banks.  While at a National level, research is still ongoing for digital currency.


Norway has been the world leader in the digitalization of money, and the People's Bank of China, as early as 2014, set up a special research group to study the issuance of legal digital currency and study the prospective issues relating to digital currencies, digital money research work.


In a study, the Bank of England pointed out that the central bank can directly control the money supply and credit creation by issuing digital money, and through this control there is no longer a need to adopt interest rate adjustments as the main policy tool. Recently, the Philippines has become the first Asian countries to launch digital currency regulatory measures, the Philippine central bank approved a digital currency exchange and similar entities in the regulatory framework, to improve the inclusiveness and efficiency of digital currency in the financial systems as well as balance the risks brought them.


Artificial Intelligence drives  Roboadvisers


Another new technology is Artificial Intelligence. Last year AlphaGo turned out a stunning debut and this year's AlphaGo’s upgraded version of Master, once again put pressure on the AI pack, frequently appeared in the major variety shows displaying all kinds of Smart robots and technology. In fact, at the core of Smart robot technology lies two modules, Deep learning and Voice Recognition in which application prospects are extensive.


Ruixin, Managing Director and Chief Economic Analyst of Asia, Tao Dongzeng, wrote that the United States has made great progress in the field of asset management, and the operation of intelligent investment business in the United States is relatively mature. In contrast, China's current Roboadvisers is behind, but the rapid development of the current Smart Finance Technology support framework has been put in place, the integration of traditional Finance and technology applications only needs some more time.


Comparing traditional financial industry and Smart Finance, AI can quickly collect and process a large amount of information to make investments, manage risks and other decision-making processes. In addition, the depth of their ability to learn is far above the human brain, they can also overcome human emotions, thinking and other weaknesses.


At the same time, artificial intelligence using high-speed computing with massive data support, can provide more personalized financial services. Roboadvisers excel when there are imbalances of information and are proven to improve financial efficiency and market efficiency.