For an indication of just how far the financial services industry has evolved on technology, look no further than its trade groups.
Just one year ago, a fintech event hosted by the Securities Industry and Financial Markets Association rehashed the already stale debate over digital advice. A Betterment employee extolled the values of automation, and executives from traditional advice firms argued that technology can never replace the value of human financial advisers.
Blockchain and artificial intelligence were mentioned, but only as concepts that were still in the early stages of development.
Fast forward to this week, and this year's SIFMA event featured multiple technology vendors demonstrating blockchain and AI products and how they can be used by the largest banks and broker-dealers.
Accern showcased the work it's doing with unstructured data and how a computer can analyze news and market events to make predictions and actionable insights for professional investors. Another fintech company, Arria, demonstrated an AI tool for generating natural language that firms can use to improve client engagement and set up an entirely digital, 24-hour customer service center. And a data scientist from BNP Paribas showed how the firm is using AI to validate scanned documents.
(More: Artificial intelligence coming to life in financial advice)
"Data is permeating everything we do, and it is accelerating," said Rob High, chief technology officer of IBM Watson. Mr. High said data will grow 4,300% annually until 2020, and financial institutions need to invest in scientists and engineers who understand how to work with it.
There were also demonstrations of how firms are taking advantage of digital distributed ledgers, popularly known as blockchain, to better execute transactions and trades.
"In order to get value from a blockchain, it's not just transferring an asset. It's creating an asset. It's having the complete lifecycle of that asset managed digitally," said Ron Papanek, managing director of Symbiont, a fintech company developing blockchain products for financial insitutions. "A manual, paper-heavy process can get transformed through this technology."
(More: Vanguard will use blockchain to share index data)
The SIFMA event also focused on how regulators are working to keep pace with the rapid rate of technology advancement to allow institutions to innovate and engage with the latest technology.
Beth Knickerbocker, chief innovation officer at the Office of the Comptroller of the Currency, told the audience that while investing in technology research and development can be risky for financial institutions, not doing so can be equally risky. She said her agency and other regulators are trying to change their own culture to foster technology development within financial services.
"Existing regimes are more flexible than you think," Ms. Knickerbocker said. "This is a great time because regulators are also very open to looking outside the box. If there's an inappropriate barrier, we want to hear that and we want to address that."
However, she reminded firms that while digitization of everything from moving money to providing financial advice can improve customer experience, firms must always be mindful of new risks. The specters of cybersecurity and privacy loom large, and Ms. Knickerbocker said firms can't "forget about blocking and tackling" as they race to develop things like AI and blockchain.
The regulator is keeping a close eye on robo-advisers, which were developed after the financial crisis, to see if they will be able to respond to the stress of similar event in the future, she said. All technology, whether from a fintech startup or a large institution, require ongoing monitoring.
"It's really important to think about governance around innovation," Ms. Knickerbocker said.
