The financial services industry has long been seen as extremely traditional in its technology use, but that is not the case, says Richard Firth, CEO of MIP Holdings, who points out the many innovations the sector has brought about over the past decade.
"From cellphone payment systems to 'almost' online-only banks, financial services businesses have turned themselves into technology businesses. This is as a result of the benefits of technologies such as cloud as much as growing demands from 'always on' customers. These days, customers expect fast and efficient service, and financial services organisations are under as much pressure as their counterparts in retail, or any other customer-facing industry," he explains.
Cloud adoption has caused a seismic shift in how financial services businesses operate, and technologies like blockchain are providing new opportunities to further their digital evolution.
According to Firth, the software as a service (SaaS) billing model is taking over the traditional licensing model, by sharing system implementation and value proposition as cloud permeates the ecosystems of financial services companies, enabling these businesses to become more efficient as well as more innovative.
"Today's financial services organisations have had to restructure themselves to manage the flood of software they are consuming, as well as make unwanted infrastructure redundant. Plenty of them are still struggling with legacy systems that were once nothing more than a server under someone's desk. Updating these so they can be brought up to speed and integrated with cloud is a highly complex and onerous task, and SaaS has made digital transformation that much easier, bearing in mind that regulators' complex requirements have almost negated the online only options for financial services companies."
He adds that as a result of their current investments, these organisations are actively evaluating, and in some cases using, new technologies such as the Internet of things (IOT) and artificial intelligence (AI) to further their transformational agendas. By bringing analytics, mobile, big data and social into their business processes, financial services organisations are becoming more agile and more customer-focused.
"I call this business process socialisation (BPS) or business to machine to consumer (B2M2C). BPS allows machines to answer a digitally connected consumer automatically via bots, AI or AR, but enables the all-important human interaction when it is needed. This goes beyond the digital strategy, as it is far more detailed in its implementation. It is about tuning and optimising to gain a competitive advantage. It guarantees business agility, and gives organisations the ability to adapt quickly."
Firth says we can already see the birth of BPS through the common channels employed by financial services organisations to interact with their customers. "There has been a lot of focus on customer-centricity, leading to the interactive mobile apps and increased touch points for consumers that the industry has invested in. With true BPS, the consumer is brought into the operational process. By allowing the consumer to effectively become part of that process, managed by the automated system that can intelligently decide when real human interaction is needed, BPS makes every customer interaction easier for the organisation and the customer."
Through BPS, organisations can gain far higher levels of efficiency, agility, flexibility and responsiveness, which in turn can help them better support changing business requirements. Offering far quicker access to information from any device or environment with a consumer-centric focus, as well as better customer feedback that leads to improved process life cycles, it represents possibly the largest disruption in the industry since mobile phones," Firth says.
"However, while digital transformation and BPS are opening doors for financial services organisations to become more innovative, they operate under specific rules that are outdated and are an obstacle to future development. Local and international governance requirements and regulations are driving down the ability for new entrants to enter the banking market, and hampering the ability of existing companies to expand their service offerings. Technology investments will only take the industry so far before regulations need to be changed."