The Value of Digital Twins in Fintech
Dr. Ingrid Vasiliu-Feltes, Globalist, Futurist & Chief Ethics Officer GBA
We are currently experiencing the digital era and an unprecedented global pandemic impact which has further accelerated the adoption of emerging technologies. The recovery process will reshape the global economy, our society and culture. Business leaders have to adapt and thrive in global digital economy, reduce the global digital divide and learn to design novel business models suitable to a digital society. The financial technology industry is regarded as the avant-garde by many experts and is expected to exponentially transform and disrupt traditional ways of managing finances. Digital only banking, open banking, digital payments, robo-advisors, contactless customer-centric applications, mobile wallets, smart contracts, as well as creating financial digital twins are considered growing trends for 2021 and beyond.
Digital Twins Globally
Digital Twins have been defined as virtual replicas of physical entities which are created in software and that can be represented by devices, people, processes or systems.
Garter describes their functionality as “ software design patterns that understand the asset’s state, respond to changes, improve business operations and add value”.
The global digital twin market is predicted to reach $48.2B and grow at a CAG of 58% by 2026 according to a recent report published by. Industries expected to capture most of this revenue are automotive, manufacturing, oil and gas, energy and power. Recently a nee Digital twin Consortium has been established that aims to deploy digital twin technology in new markets, as well as in the development of smart cities.
Due to the impact of Covid-19 fintech, healthcare and life sciences are attracting quite a lot of attention from investors as well. By deploying digital twins in healthcare and life sciences we could envision a transformative impact on global population health, contribute to preventing future pandemics and facilitate the design a global precision medicine ecosystem. Through digital fintech twins we could further accelerate fintech innovation, enhance fintech data governance and create the next generation fintech ecosystem.
Digital Twins in Fintech
It is important to highlight that in addition to some of the general benefits offered by digital twins such as shorter development time for new applications or services, improved productivity, lower maintenance costs and less risk digital fintech twins offer a few unique advantages. These can be categorized as individual and organizational.
For the individual consumer digital fintech twins can translate into enhanced experience, less data breaches, enhanced privacy and ultra-personalized fintech services.
Financial organizations deploying digital twins can realize cost savings during new product development and rollout phases, as well as enhanced revenue due to enhanced operational efficiency or ability to roll out numerous products simultaneously.
By using digital twin technology they can also run their data centers more efficiently, achieve higher data management fidelity and save costs by having less overall downtime. Furthermore, by having the digital twin technology fintech organizations can engage in an ongoing quality improvement process for their infrastructure without any service disruptions which in turn can improve operational efficiency and consumer satisfaction. One additional major advantage is digital safety and ability manage cyber-risk more efficiently. The ability to incorporate digital twin technology to run simulations that assist in developing robust cybersecurity defense systems will be paramount in protecting our digital identities and an ongoing process that can be fully automated.
Our hope is that digital twin technology can also be embraced to assist financial organizations in developing comprehensive solutions that facilitate attainment of the United Nations Sustainable Development Goals.
Creating a global digital twin cohesive regulatory, compliance and legal framework has been identified as one of the main challenges, with ethical and data governance concerns following closely. Additionally, issues of portability, interoperability and creation of international standards are also on the top of C-suite agendas when planning large scale digital twin deployments. The convergence of emerging technologies required for optimal deployment of twin technologies is also driving the need for talent development, ongoing workforce re-skilling or re-purposing due to intelligent automation and a disruption in legacy systems that are still being used by certain demographic subsets.
Bridging the digital divide existent in certain regional markets to ensure equal opportunities in twin technology deployments will also have to be addressed.
Bending the cost curve remains an important task as currently only large institutions can afford two invest in digital twin technology.
As with all technologies cybersecurity concerns are always present, although digital twins can actually mitigate that risk significantly as highlighted earlier.
To remain competitive and relevant the fintech industry must continue to innovate, embrace digital transformation and be an active stakeholder in building a new fintech ecosystem. Digital Twins are a wonderful use case for showcasing the benefits of multiple emerging technologies. Designing smart cities, smart communities and smart ecosystems powered by optimal digital twin deployments is a vision that currently only futurists can entertain and will require some time to reach large scale adoption. The augmented advantages of artificial intelligence, ledger technology, 6G networks, IoT and next generation computing such as quantum or cloud-computing can completely transform the fintech industry and give rise to a new fintech ecosystem ready for the 5th industrial revolution.
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