Fintech Yearbook 2021 - AI, Automation, Cloud and API

Some believe that finance is divided into two eras, before Fintech and after Fintech. Now as the year of 2021 wraps up, let us take a look at what happened in the industry that involved fintech, particularly AI, automation, cloud computing and API.

Automation

Automation is an extremely important part of finance strategy. After the Covid pandemic, accounting teams will be looking for optimum solutions suitable for remote work conditions, therefore automating financial procedures will become more of a focus.

Fintech automation offers the key to long-term corporate productivity. Finance organizations must also implement solutions that assist them in navigating volatile markets.

Automation plays a vital role in numerous forex solutions. As we look back at the year of 2021, there are seven brokers that either started or escalated the automation level of their trading procedures, including Solitics​ and Eightcap​, based on Fazzaco's coverage. Muinmos, a regtech firm, boasts a highly automated and proprietary client onboarding system. Its Customer Success Director, Julien Mabit, highlighted the role of automation in client onboarding during an exclusive interview with Fazzaco by saying "...if one financial institution has automated onboarding and can onboard clients within minutes whilst also being fully compliant, then their competitors can't get away with taking four or five weeks to onboard clients. The only way forward is to automate key processes using RegTech solutions."

Nevertheless, some others are standing from a completely opposite position in terms of how automation is applied. "...personal service and attention can never be replaced by automation," commented Ellen Roberts, the Sales Director at ClickaCRM in an interview with Fazzaco, even though she believes that "certain aspects should be automated as much as possible".

Personally, I believe that automation is something completely different from AI or machine learning. To put it simple, we are instructing a computer to conduct certain operations based on fixed rules. E.g., a computer is instructed to sell assets to stop loss when the price is dropping below a given amount. But a computer would freeze when it encounters a circumstance that does not match any of its pre-programmed codes.

AI / Machine Learning

Artificial intelligence is assuming that human intelligence can be so precisely described that a machine can be made to simulate it. Similar to automation, it is used to free up manpower, improve safety and inspire innovation in finance. According to Forbes, some 70% of financial institutions are applying machine learning to predict cash flow events, adjust credit scores and detect fraud.

Typical machine learning scenario - an input is entered into a computer, such as a set of variables or data set, waiting for it to output the result of the input variables. Then, the computer will find out or "learn" about what rules are working between the input and output.

Several forex brokers have partnered with tech firms, as Fazzaco reported this year, to apply the technology in trading, such as SquaredFinancial​, a global investment gateway, partnered with France-based software company Lusis to provide AI-based forex trading strategies to investors.

Indeed, AI/machine learning are bringing better trading experience in many aspects. It is impossible to predict whether they are truly helpful for the industry since they are still underdeveloped in general.

Cloud Computing

Cloud computing is named as such because the information being accessed is located remotely in a virtual place, and it allows users to work remotely by eliminating the hard lifting of crunching and processing data from the device you carry about or sit and work at. The cloud is the Internet.

There are three main models of cloud computing services, according to the U.S. National Institute of Standards and Technology:

Software-as-a-service (SaaS): where a user uses an app but does not control the OS, hardware or the infrastructure. An SaaS provider offers the service through rental instead of purchase. E.g. Adobe Creative Cloud, Microsoft CRM or Salesforce.com

Platform-as-a-service (PaaS): where a user operates an app by having control over the app environment, but does not have control over the OS, hardware or the infrastructure. A platform in this case, is the app's infrastructure. E.g. Google App Engine.

Infrastructure-as-a-service (IaaS): where a user accesses processing capacity, memory, network components or middleware. The user is in control of the OS, memory, deployed apps and network components, but not the cloud's infrastructure. E.g. Amazon AWS or Rackspace.

Particularly, leading forex broker CMC Markets partnered with Amazon Web Service (AWS) in early 2021, freeing up their valuable development hours from managing servers.

API

Application program interface (API) refers to the code provided by the computer operating system or program library for application calls. Its main purpose is to allow application developers to call a set of routine functions without having to figure out the underlying source code or understanding how it works in details. API itself is abstract for it only defines an interface, and does not involve specific operation of the application in reality.

In the eyes of Ellen Roberts at ClickaCRM, an online trading brokerage that uses CRM without the integrated Payment Service Provider (PSP) to accept online payments is like a chair lacking the fourth leg. The common obstacles to integrating PSP with CRM are point-to-point integration and security and safety issues, posing many limitations. Among them is the inability to handle a large amount of customer data, rigidities, complexity, slower processing times, and limited depositing options. The solution lies in API-driven integration.

​That explains the reason why we saw a number of stories on the application of API, from places like Tokyo Stock Exchange​, or Spotware​, the developer of cTrader, or tech firm Your Bourse​.