If codebreaking during WW2 was the first 'killer app' for computers, it was their ability to crunch through financial data that earned them their place in the corporate arena. Today banks and other financial institutions are so reliant on computing systems that their servers are more sacrosanct than their vaults.
These companies can now most accurately be described as technology companies that just happen to deal in financial products - the old image of bank tellers, cash drawers and ledgers giving way to optic fibres and mobile apps.
Computers have long been at the heart of investment activity. High-frequency trading platforms live or die on speed alone. Billions can be made if you have faster computers and a faster data connection than the other traders.
Speed is one thing, but smarter systems are in an entirely different league, and next revolution is about having a more intelligent trading platform than the next firm. If the savvy of the world's most successful investment magnates can be replicated or bettered by a machine, then the firm that runs that machine has the goose that lays the golden egg.
Using pattern-matching artificial intelligence and big data analytics, systems are already available that act as 'robo-advisors'. While these systems do not (yet) outperform the best human managers, they continue to steadily improve.
Behind the scenes, financial institutions are used to deploying automated systems to undertake credit-scoring and fraud detection. The customer friction caused when these systems trigger false positives and prevent legitimate customer transactions is significant. Deployment of machine-learning based AI as part of the toolchain is reducing these instances and therefore reducing the number of angry "why have you blocked my purchase?" calls to customer service centres.
Automated artificially intelligent systems are also a significant part of new budgeting, spending analysis and saving tools. Systems that can scan through a series of bank account entries and attempt to categorise spending and make budget recommendations have been available for some time. Adding AI into the mix allows for a quantum leap in accuracy in such systems, with transaction patterns detected across a population of users leading to more accurate categorisation for all users in future.
Moving even further into the consumer-facing area, the idea of "zero UI" transactions is being pursued by various players. In an ideal form, the user interface disappears entirely and a user can conduct transactions (whether with their bank or with retailers via a secure payment platform) simply by speaking to their mobile device.
While we are used to 'digital assistants' like Apple's Siri, Amazon's Alexa or Microsoft's Cortana being able to react to instructions to play songs from our music library or undertake simple web searches, a new wave of digital assistant functionality will allow those same systems to provide a spoken interface to financial systems and to support purchasing transactions.
The legal, regulatory and technical challenges posed by these new systems are considerable. How such systems verify that the relevant user is present and is actually initiating the transaction (as opposed to someone else with a recording of their voice or other falsified ID) is not easy. Security of data, and data protection compliance, remain paramount in an increasingly data-sensitive world.
How fraud liability is divided between the technology platform providers, payment scheme operators and merchants remains an area of debate, as are the commercial underpinnings. Just one example is that different players in these nascent markets have very different ideas about the percentages of each payment transaction that the intermediary facilitators might each take.
As players in the financial sector implement and realise the advantages of these new technologies at every level of their businesses, the impact of the industry, and the opportunities for new 'FinTech' players to gain a foothold, are immense.
These opportunities - and related pitfalls - will be discussed at the third DLA Piper European Technology Summit. This event, hosted in London on Wednesday, September 28, will bring together key decision-makers from across Europe’s tech sector to explore the latest trends in automation and AI, the Internet of Things (IoT), Fintech, cybersecurity and more.
If you'd like to hear a variety of perspectives on the topic, or add your own voice to the conversation, then register your interest now to attend this exclusive event.
To participate in the conversation online, follow the #DLAPiperTech16 hashtag.
Gareth Stokes is a Partner in DLA Piper's Technology and Sourcing Practice.