“The collapse of the financial market occurred when customers began to interact digitally”
- IN
— I do not believe that quantum technologies willa key driver for changing processes in the financial market in the near future. Typically, changes occur due to the fact that the business comes up with new processes and patterns of interaction with the end user of services, and new technologies, as an available tool, help in this.
For example, a serious breakdown for the financial marketoccurred when the processes of interaction with customers began to go digital. This has changed the requirements for financial institutions and the need for digital transformation has arisen. After that, organizations came up with a new logic for servicing and selling a financial product through digital channels of interaction.
Grigory Gashnikov
Quantum technology is only one of thecomponents - no more and no less. In the same way, they use big data, blockchain and other technical solutions for the final technical implementation. Can quantum technologies significantly affect the financial market as a whole? This strongly depends on the success of their further development. Ready-made solutions in terms of quantum communications and some industrial developments in the form of post-quantum cryptography are two areas that have the greatest prospects for application.
But in general it seems that for the financial marketRussia is a prospect of several years. For example, the blockchain went about the same way - everyone wanted to touch this technology, but did not understand how to benefit from it. Like blockchain, quantum technologies will gradually find their niche. They do not replace other technologies, they simply become effective in certain tasks both in terms of capital investments and due to their potentially unique advantages in the field of information security.
— What technologies most influence the financial sector?
“There are enough of them today.First, artificial intelligence (AI) and big data have many applications. For example, to analyze and create a retrospective and predictive analytics: in fact, to study the history of interaction between a client and a financial institution in order to predict how to increase the effectiveness of such interaction, that is, to optimize processes and sell more financial services.
One of these days Fintech Hub of the Bank of Russia with partnerslaunched a recruitment program for an educational program on AI, which will be held early next year. We will explore new hypotheses for the use of this technology to optimize the calculation process when compiling personalized client products. This is necessary in cases where the system should automatically form an idea about the client from a variety of information sources and offer the best product, taking into account risks.
The second technology is robotization, which is used to automate routine processes at the mercy of algorithms so that human resources are not wasted on performing the same type of actions.
Another important area is biometrics.identification as one of the options for reliable identification of a person. It is clear that multi-factor identification will work with it - for example, entering a secret word or code from an SMS message, so that access to your personal accounts and the possibilities of financial transactions does not depend on your biometrics alone. Biometrics is now being considered for the widespread introduction of remote contracting or authorization processes for remote payments.
It should also be said about cloud technologies.Previously, they dealt with the issues of renting or locating computing power. And now these are ready-made integrated business platforms based on the BaaS principle. If earlier, in order to open a new bank, it was necessary to deploy its infrastructure, develop and implement information and automated banking systems, start processing, and so on, now you can rent the entire composition of these systems for the volume of business that a neobank needs to start and maintain life right now. This direction of technology provides an advantage for the rapid entry of a new player into the market, which increases competition.
“Another important area is biometric identification”
“Foreign big techs use AI more actively and trust them”
— Will AI have a greater impact on the financial market in the future?
— There are already examples where some processescompletely devoted to artificial intelligence algorithms. By it, we mean the work of algorithms that are given the opportunity to learn, act autonomously and independently interact with a person. But the transfer of broad powers to artificial intelligence and the ability to make decisions is now unlikely due to the significant risk of making a significant error in the operation of such algorithms.
In this case, there should be a precedent whensome organization will take a similar step and implement a product using AI without manual control. And then all the other market participants will reach out. To such technologies and increase awareness of your brand. Foreign big techs use AI more actively and trust them, for example, to determine the amount of purchases based on forecasted demand.
Therefore, you need to look at these technologies inthe prospect of improving the quality of the AI algorithm code and the implementation of no-code principles. Usually in large banks there are a huge number of information systems at different levels that perform various tasks. If AI needs to be built in there, logically, the technology should end-to-end take over individual processes within a financial organization. I think that companies are not ready for this yet - in case of errors, you can ask the employees, not the technology, besides, the technology, if it was given carte blanche, may not stop when performing some actions, and a person is able to realize a mistake in execution process.
— What innovations seemed to you the most interesting and useful?
- Many tasks are now dictated by the situation -for example, replacement of information systems of those companies-vendors of software which left the Russian market. The demand is not for a breakthrough or a new innovation process, but rather a focus on adapting to the current situation. Therefore, it is difficult for me now to assess that there are still some new technologies that are on the threshold and will dramatically transform the financial market.
But in general, our financial infrastructure isCompared to most countries in the world, it is significantly developed. We have our own interbank internal Fast Payment System, where we can transfer money using a simple identifier - a mobile phone number. There are legislative initiatives and possibilities for using biometrics to conclude completely remote transactions through the Unified Biometric System.
“We have our own interbank internal Fast Payment System, where we can transfer money using a simple identifier - a mobile phone number”
Recently, efforts have also been made todevelopment of standardization of integration interactions between financial market participants (Open API). Such standardization is useful for, for example, a company entering the financial market with a new service to start working through a unified approach to integration with external data sources. This will significantly reduce the cost of maintaining and creating integration interactions for existing participants and new players. Open APIs can seriously accelerate the development of services such as aggregators, financial service providers, jointly combining a number of bank accounts and financial services in a single interface. Recently, the Bank of Russia published the concept of Open APIs, which considers implementation models and possible approaches to regulating this area of fintech.
We also presented a report on trends in the fielddigital financial assets. This is a separate type of obligation, confirmed entirely in digital form, information about which is stored on the operators’ technology platforms.
So now there are many possibilitiesfor the emergence of new integrated digital services that increase competition and the availability of financial services for all residents of the country, regardless of the region of residence and application for the service.
“Organizations have stopped spending money freely on innovation”
- How favorable is the time to create new projects?
— Many large financial institutions conductthey do not think of closing acceleration work and their venture investment programs. Therefore, startups have a chance to get funding to develop their idea into a full-fledged project. Fintech Hub of the Bank of Russia supports the development of creativity among its graduates — in a little over a year we received three hundred ideas for financial and near-financial services from schoolchildren and students.
For example, recent graduates of Fintech Hub BankRussia was presented with a ready-made prototype of a behavioral biometrics solution. This is identifying the person at the ATM and measuring their stress level relative to standard behavior. This stress may indicate that the person on the phone is being influenced by scammers, and it makes sense for the client to clarify the purpose of his visit. The authors of this project presented it at the exhibition area of the Finopolis 2021/22 forum.
The forum also presented a prototype for creatingplatforms for interaction between innovative laboratories and customers of scientific research. Now innovative research laboratories often find customers through word of mouth. And we offer a platform that fully controls the entire cycle - from the conclusion of a transaction to its execution using a transparent procedure on smart contracts. This is how we gather all conscientious performers and customers in a single ecosystem, increasing the amount of investment in research science and the number of successful results of these studies.
— When you propose such initiatives, do you notice that over the past year the interest in innovation has decreased? No more daily headaches for financial institutions?
- Now some organizations have ceased to freelyspend money on innovation. They just got more sensible about it. I will not say that interest in innovation has cooled and weakened. It's just that now there are much more thoughtful investments, point queries, formulated better.
“Now some organizations have stopped freely spending money on innovation”
— Has the attitude of fintech startups and classic banks changed?
- I did not notice changes in attitude, it is difficult for meTo evaluate in general, we at the Fintech Hub are constantly working with a new stream - teams that are doing this for the first time, and therefore we see the same enthusiasm. Many of them want to conceptually change the work of a particular area or an entire product niche. For example, I recently attended an Open API hackathon, and there was a team that offered a platform with a transparent procedure for controlling donations to charity. As conceived by the authors, this is a service where you can deposit money and track how they are used. We agreed with the team that we will support this project in the next six months and stimulate its functional development with our expertise.
What technologies can we expect in the near future?
— For the financial market these are not even separatetechnologies, but new approaches to the sale of financial products. All trends can be tracked on the Bank of Russia website: in addition to the Open API concept I mentioned, reports on decentralized finance and the development of the digital asset market in Russia were recently published. Also, in recent years, a basic financial infrastructure has been created in Russia, allowing financial organizations to build their business processes on its basis.
An example of such a process would be a pilotthe Digital Mortgage project, in which we participate with a number of banks. The client, using the information system of a commercial bank, State Services, the Unified Biometric System, the Faster Payment System, a system with electronic signature and document storage, can remotely issue a mortgage loan. This is an example of a process implementation that combines the functionality of a number of information systems. As a result, regardless of location, the consumer can choose from a number of offers the optimal one for himself, even an offer from a financial institution that does not have offices in the immediate vicinity. Therefore, most likely, in the near future the emphasis will be on technologies that increase the accessibility of financial services and the convenience of their consumption.
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