On the back of the unprecedented change caused by the pandemic comes the annual Nasdaq Tech Trends report which highlights the 4 Key Trends that will sustain and have the biggest impact in the coming year.
- Use of Custom Chips: Innovations in Systems on a Chip (SoC) & Field-Programmable Gate Arrays (FPGA) are leading to rapid adoption of ARM and GPU chips which will allow for more efficient trading systems, reducing complexity while lowering the cost of end products further.
- Adoption of Edge Cloud: The adoption of Edge Cloud will grow and this will reduce reliance on centralized processing in a single computer or single location and allow for faster rate of migration of financial service workflows to the cloud. An Edge Cloud architecture is used to decentralize (processing) power to the edges (clients/devices) of your networks and the trend was also mentioned in the 2020 Nasdaq report.
- Data Sharing: The increasing adoption of cloud by financial services along with the use of Federated Learning and Homomorphic Encryption could potentially overcome regulatory and other barriers to sharing and analyzing data in the financial services industry. With federated learning, organizations can share insights without actually sharing data. Moreover, homomorphic encryption is a form of encryption that allows one to perform calculations on encrypted data without decrypting it first and this can allow financial services to share data, retain complete control over who can access or perform analysis on it, and have auditability of that process.
- Accelerated Adoption of SaaS and Cloud: The adoption of software as a service (SaaS) model in the cloud will allow for much faster and cost effective workflows for processes to onboard clients as well as upgrade products and deliver new ones. This will also address resiliency and capacity concerns of financial companies while security remains paramount. Similar to Edge Clound, increasing use of SaaS was also noted as a tech trend in 2020.
Nasdaq has been highlighting the emerging technological trends for last 5 years now and offers a birds-eye view of the most impactful technological innovations that will shape the landscape of financial services. Past reports have noted following;
- Convergence of technologies like IoT (Internet of Things, IoT), cloud computing across industries including financial services
- Use of Machine Learning and AI to get data driven insights will continue to increase in financial services and become mainstream
- Use of Open Source code to solve common community problems in financial services also
- Trial of Blockchain to commercial applications will continue until it becomes mainstream
- Cybersecurity will continue to pose a threat and will require constant vigilance
- Ability to create and process data at scale and in real time enabled by machine learning, cloud computing and 5G will spur innovation and will allow lot more businesses to go ‘real-time’
- Use of Cloud and Platforms and API’s are enabling machine to machine communication and contributing to the above trend
- Quantum Computing will be a game changer for capital markets but time frame is uncertain