The Financial Services sector has mainly recovered from the battering of its reputation during 2007/2008. Now, competition in the sector between the long established institutions and the ‘challenger’ banks has increased beyond expectations. Both institutions and challengers have to accelerate their business models to deliver more value in a much shorter time frame. Some of the key issues ‘Intelligent Suppliers’ to the Financial Services sector can help address are as follows:
- Cybercrime. Data breaches by financial services companies is increasing by a factor of 5 year on year. Whilst financially these breaches are costing many millions for the organisations involved, it is damaging the personal and corporate reputations even more. Some are adopting distributed ledger technology (DLT) and are advocating blockchain technology as the ‘holy grail’ to keep financial data secure. Whether the implementation of this protection is all it is made out to be, remains to be seen.
- Regulatory Compliance. The regulatory environment is a constant challenge for financial institutions. It continues to change regularly. Some of the Fintech technologies can support better efficiency of compliance through automated reporting and audits, along with process streamlining.
- Big Data Use. The correct analysis and interpretation of ‘Big Data’ can help identify and profile key target markets for financial institutions. The advent of social media and news feeds linked to customer databases allows better value to be identified and delivered to customers, whilst protecting the financial institution itself. Powerful data analytics technology helps to sort through the huge volumes of information.
- Artificial Intelligence. Artificial Intelligence is starting to transform most aspects of industry, including Financial Services. The technology is advancing rapidly in ‘deep learning’ to provide more intelligent analysis to customers and financial institutions alike.
- Fintech Collaboration. Fintech companies are not going away and a number continue to rival more mature institutions. A number of the more established players are testing much deeper collaboration with their potential ‘rivals’, rather than out-and-out trying to put them out of business.
- Customer Retention. What the Fintechs have provided is very personalised financial services to consumers. This has seen their rapid growth over the last few years at the expense of the more mature, ‘branded’ institutions, making competition for financial service clients formidable. The trend seems to be greater personalised and automated services, much faster and at a lower cost.
- Employee Retention. Allowing individual lifestyle factors seems to be the new ‘pay rise’. More flexible working patterns, and placing more management trust in the individuals to allow them to work from home to cater for child care arrangements, looking after sick relatives and/or friends, is what the millennial workforce is seeking. It seems most millennials work for ‘purpose’, rather than just money. Although they expect to be fairly well rewarded for their efforts, flexibility on holidays and working arrangements are more likely to inspire retention.
- Blockchain Integration. Systems that take account of blockchain technologies provide assurance, not only for cybercrime, but also for investment opportunities and customers having a platform for safer payment transactions. It is likely to take some time to reach maturity, however.
Few of the more mature branded institutions have advanced their technology stacks, including those incorporating ‘cloud’ based solutions. This is understandable given the significant investments they have made in their systems and their technical teams, along with their perceived uncertainty of security for cloud based systems. However, technology and its ability to deeply personalise services for customers means that the sooner these more advanced technologies are adopted, with appropriate protections, the faster progress will be made.