Financial services might not seem like a disruptive industry at first glance. Many banking institutions have been around for decades. However, to meet today’s customer expectations of service and experience, financial institutions need to reevaluate their digital business strategies.
For startups to long-held companies, technology has become paramount to success in the financial services space. The numbers back it up. According to a report from PWC, global investments in fintech more than tripled in 2014, reaching more than $12 billion.
In comparison, banks spent an estimated $215 billion on IT worldwide in 2014, including hardware, software, and internal and external services.
So what does this digital boom in the finserv actually look like? We’ll be holding a Twitter chat on digital transformation for financial services on #AcquiaFinserv at 3 p.m. BST on 26 July to get real-world insight from industry insiders. We have invited a number of U.K.-based digital transformation experts to share their thoughts and perspectives, what trends they’re witnessing, and what has become outdated.
To kick off the discussion ahead of the chat, we have asked each expert to discuss the key challenges and opportunities facing finserv companies that are actively engaging in digital transformation.
Here’s what they said:
Silvia Cambia - @silviacambie
Silvia Cambia is Europe leader, Watson Workspace Ecosystem and ISV at IBM.
Changes in customer behaviour are forcing banks to improve the customer experience and become more relevant to their value chain. Control of the customer interface and personalisation are absolutely key.
Traditional banking is coming under threat due to new business models, the so-called platform economy. Take for example Alibaba or Tencent in China, which have embedded financial services in messaging and search.
There is also the high cost of compliance. It is expected that #finserv will have 300 million pages of regulation by 2020. Banks now have an opportunity to apply the latest AI tools to increase the efficiency of regulatory compliance.
Cybersecurity is becoming more of a risk as technology evolves. This presents an opportunity for banks to rethink risk management, so they are no longer focused on risk prevention but much more proactive, for example by detecting patterns through AI and advanced analytics.
Bill Mew - @billmew
Bill Mew is a global privacy, cloud and govtech expert and founder of @Mew_Era
Digital transformation is as much a cultural challenge as a technological one. The greatest advances come from taking the opportunity to entirely re-engineer processes, which can cut across silos and threaten bureaucratic fiefdoms.
In the financial sector, almost everything is already digital - technology has been at the heart of all operations for years now. Digital transformation needs to be an ongoing process that is part of the culture in order to avoid obsolescence.
Digital transformation is not something that the techies do, or that is a one off project. There may be flagship initiatives, but the pace of change means it needs to be a cultural ethos that is embedded in all functions, all of the time.
Ian Moyse - @ianmoyse
Ian Moyse is the No. 1 social influencer for cloud and sales director at Natterbox
Digital transformation for any firm is hard. The technologies needed are invariably available and at affordable costs to any size business now, through the delivery of cloud, big data, IoT, AI and the rapid consumerisation of these new technologies.
The challenge facing firms is overcoming the barriers of people resistance, change of legacy process and unchaining from legacy ball-and-chain systems. In finance, risk mitigation and security diligence is at a higher resistance level (and rightly so) than many other sectors, impeding and slowing transformation initiatives.
The finance sector also retains many legacy systems of old that are challenging to move away from and hinder digitisation initiatives, giving traditional finance firms a challenge when competing with the new challenger “unicorns” in the finance sector. These newborn firms can easily adopt new all the latest customer serving technologies and start from a position of agility in serving the new millennial customers’ expectations.
Antonio Grasso - @antgrasso
Antonio Grasso is founder and CEO of Digital Business Innovation Srl.
As in many other industries, financial services are facing a wave of disruption due to the digital transformation process that is occurring.
The society, economy and institutions are changing the way they relate to each other. This is due, in part, to technological advancement, but digital transformation is not only about technology, it is a paradigm shift. Finserv companies need to change their approach to innovation, including people, process and mindset in the mix.
Due to this paradigm shift, the finserv sector is also being shaped by new regulations, different market conditions and new shift in consumers’ demands and people behaviors. As a result, they need to follow this epochal change, harnessing the potential opportunities behind the society transformation.
Particularly, finserv needs to embrace emerging technologies and shape their adoption. The next challenge for the #finserv industry is to turn disruptive innovation into sustainable innovation.
John Cant - @john_cant
John Cant is founder and MD of MPI Europe.
Challenges and opportunities for #finserv come in XL these days. From regulation – AML/KYC, MiFID II, through Brexit, GDPR, machine learning to digital transformation.
Fundamentally digital is data-driven, likely combining data across applications that were not designed to share and in multiple combinations delivered across multiple devices and flexible formats. At the same time, satisfying the competing needs for transparency, privacy, tracking and engagement.
Digital transformation for #finserv is not simply converting tables of figures on a website or email into smart graphics, or replacing static content with video. It must recognise a potential shift in control towards the customer. Despite improved targeting by digital savvy firms, sophisticated customers can more easily handle multiple #finserv providers and switch more rapidly between them if not satisfied with their service on their device of choice.
Those firms that can deliver and evolve without technical meltdown in this potentially chaotic environment will prosper. Those who don’t rise to the challenge may find themselves on a list of consolidation targets.
Paul Denham - @Paultdenham
Paul Denham is director of go-to-market services at InsightBrief
The biggest challenge for incumbent financial services organisations, e.g banks, is a realisation that digital is a complete transformation of the fabric and foundations of the organisation. Unless they get this, which most senior decision makers in banks don’t, then their future is not rosy. The financial services sector is not short of startups with technologists at the helm, disrupting the status quo.
Join our experts for our live Twitter chat on Thursday 26 July at 3 p.m. BST, using the hashtag #AcquiaFinserv. The conversation is open for everyone to participate.