Technology is driving changes in major industries
We are sure It won’t be a surprise if we say that the smart use of technology is an integral part of success in today's business. We live in a digital age - using mobile devices to create, cloud computing to collaborate, cognitive computing and artificial intelligence to improve operations, and data analysis to extract key information. And that's just scratching the surface.
However, we are not sure most people understand how technology can help make a good company great, and the owners of great businesses—and hopefully, their teams—wealthy.
The industries of the future are all powered by tech
Number one industry? Technology, without a doubt. Tech companies receive almost half of all venture capital dollars and are projected to continue to grow. Cloud computing, machine learning and artificial intelligence, as well as big data, were cited as sub-sectors that will have the greatest impact.
But as you continue, you notice the same common denominator: regardless of the industry, the main reason for the expected success of that industry is how technology has changed and will continue to change its trajectory.
Each industry on the list is driven in some way by the benefits that technology will bring in particular. When it comes to finance, it's financial technology or cryptocurrency.
The "digital revolution", conceived as the large-scale diffusion of digital technologies, continues to have a significant impact on all manufacturing sectors. In particular, the financial services sector has undergone a far-reaching and unprecedented process of technological innovation that has led to the emergence of financial technology or otherwise known as FinTech. It is a high-tech branch of the economy, applied to the financial sector, driven by innovative start-ups, and aimed at improving the services offered through innovation.
Difference between Fintech and Legaltech
- Legaltech aims to revolutionize the legal industry. As we have come to know, AI is revolutionizing the legal profession by making it more efficient and accessible to people in developing countries while at the same time extending an opportunity to those without access to attorneys. AI is having an abstruse influence on the practice of law.
Though AI is more likely to aid than replace humans in the near term, it is already being used to review contracts, find relevant documents in the discovery process, and conduct legal research. More recently, artificial intelligence has begun to be used to help draft contracts, predict legal consequences, and even recommend sentencing or bail decisions.
- Fintech, aims to revolutionize the financial services industry and the partnership with Apps and Artificial Intelligence, could really become the key to the success of future digitisation in this field. In fact, Artificial Intelligence in finance is already transforming the way we interact with money, helping the financial industry to streamline and optimize processes, ranging from credit decisions to quantitative trading and financial risk management.
Artificial intelligence and machine learning in finance incorporates numerous services, from chatbot assistants to fraud recognition and task automation. AI has succeeded in minimizing human errors in banking procedures, enabling banks to effectively understand their customers' demands.
- Legaltech is the use of technology to provide legal services to lawyers, institutions, consumers of legal information or companies. A Legaltech product is essentially a product for the market dealing with legal information. It provides practice management, document automation, document storage, billing, accounting, and electronic discovery.
- While FinTech is a category of its own, that encompasses all technologies created for financial institutions or consumers of financial services. It is used to automate investment, insurance, trading, banking, and risk management.
Therefore, these classes are not overlapping.
The financial sector can benefit greatly from legal technology
In-house legal teams irrespective of any sector of industry, especially in the financial services sector, face competing pressures like reducing costs, being updated with changing compliance, to stay up to date with the changing governance. In this highly competitive market, where quality work and the speed of service delivery are the top priority for success. Legal tech CLM solution can be a very handy tool to achieve a desirable result like:
1. Managing Risk and Compliance
The most valuable feature of the CLM is its full visibility and automated processes enabling organizations to quickly and successfully onboard vendors and customers for e.g. in the banking industry where organizations face extremely strict regulatory environments and compliance monitoring.
With CLM a bank can ensure that all agreements contain updated, approved versions of clauses. Using a robust, comprehensive clause and legal teams can track all non-standard or deviated clauses; plus, with SpeedLegal a comparison with market standers. All of this ensures greater compliance with internal and regulatory rules
E.g.: The famous EU (GDPR) came into effect on May 25, 2018. With my hand on experience, we know companies had to update their DPAs just to easily their trade practice. the legal tech solution was their rescuer to help and manage their risk and to have correct compliance with the changing law. You can get more information on PRIVACY POLICIES BY COUNTRY.
2. Financial statements can be simplified and standardized
As described above in the differentiation between Legaltech and Fintech it was clear that these are not overlapping classes.
However, Legaltech solutions can be, and are, also used in the financial sector. Indeed, if you are familiar with the system of Robotic Process Automation (RPA), a theme very dear to FinTech. Document automation technologies, which made their way from the legal sector have passed on to the financial sector and can therefore be extended to any type of document that is susceptible to standardization, such as invoices, reports, and orders, and for the drafting of large-scale banking agreements.
In fact, in a working case e.g. As extracted data can be exported into CSV format and be able to use within Excel sheets and other platforms it is extremely useful for Cost Accountants, contract managers, and CFO’s CEO enabling them to speed up their process.
Financial services are considered one of the top departments in almost every organization as they function together with different departments to bring out efficient results. Due to the centralized digital storage across regions and departments, the authorized executives can retrieve contracts within a second and enables management to evaluate performance parameters.
By using a digital contract management system, organizations can generate quick reports and monitor the status of contracts. The visibility of contract security remains excellent, which leads to better collaboration, resulting in significant savings of time and cost in finalizing contracts.
E.g.; a platform having a Team Account which can collaborate documents within the team allowing them to use CLM to its best use and increasing their negotiation power. Offers, management to collaborate on documents so the team can study pricing and contractual obligation and give their partner access to the contract which indeed helps build a better business relationship.
4. The solution to ever-increasing internal cost pressure
Legal AI base software adds stronger, secure precisely accurate foundations of financial transactions. With the change in privacy laws which by default impact financial regulation, increasing its compliance and when new regulatory frameworks are in place, financial documents may need to be reviewed and amended in light of the new guidelines.
Technologies such as AI and natural language processing, help users, management, and finance experts create better-educated decisions on cash flow and forecasting. These technologies of algorithms bring a neutral, unbiased data-backed prediction based on the facts for example concerning changing provisions on interest rates, borrowing bases, fair market prices, and other industry-specific clauses. The use of contract automation and Legaltech software can help considerably reduce the time and costs of this activity.
5. Legaltech software also takes care of your Data security
Security of data present in contracts is one of the top priorities of any organization especially when it comes to the financial sector toes consist of a huge amount of sensitive information plus companies share this data with other partners such as fintech firm to achieve their desired customer satisfaction. Being a part of high scrutiny, it is required to show that the financial industry opting Legaltech solution have a framework in place to manage contract efficiently
Consequently, companies must employ a strong contract management system that ensures protection from data leakages and ensures data confidentiality.
To our knowledge, the most interesting fact for the client is to know which of your CLM system is registered on.
6. Managing legal spending and accelerating the process
It is assumed that financial institutions are, “the” early adopters of all the new technologies, embracing and making the best out of them. when contracts are non-standard or include negotiations, contract automation can significantly speed up turnaround time.
The banks who have already installed a CLM system that was integrated with specialised procurement tools, enabling self-service capabilities, and integrating a contractual workflow, freeing the procurement staff to concentrate on tasks of higher value. Since most banks have a trading entity of some kind, Legaltech software will give proper visibility and enhance process management.
For example, if a contractor wasn’t able to complete work by the agreed date, you may not launch a new product or service on time, leading to financial losses.
If no one monitors contract renewals and a contract expires, there are huge implication. We have a perfect example given in this EP 16 Contract Management and Businesses
The significant way tech has transformed industries is by automating uninteresting tasks which benefit organizations by saving cost, time, and efforts and enables staff to focus on other crucial tasks to provide better customer satisfaction.
Finance businesses should concentrate on CLM in 2022 in order to ensure that they are streamlining business processes and ensuring risk protection. CLM will be a crucial element for anyone seeking to transform their businesses digitally, and its importance shouldn't be understated.