Despite the significant moves within the digital arena resulting in WEB 3.0, an advanced AI and Blockchain, the vast majority of companies operating in the financial industry are still unprepared for the widespread digital disruption set to occur in 2020. Internally, businesses within the financial services are beginning to acknowledge that good people and curated company culture are instrumental for company growth. However, the importance of equipping and enabling digital natives with the right technology is yet to be sufficiently acknowledged. 2020 will bring an unprecedented demand for the acknowledgement of both these factors to succeed in embracing digital disruption.
Digital disruption is an inevitable by-product of innovation. The impact of this transformation on financial services is one that must be anticipated for businesses to grow and develop amongst the ever-changing landscape. Internal senior leadership is currently tasked with the responsibility of deciding what strategies to deploy to position their companies for the future.
Establishing what must now become a priority to find the most effective approach in an industry gearing towards macroeconomic trends, which are increasingly technologically driven, is now an undeniable factor. Financial service providers are looking to their IT/ Digital departments to lead the charge in Fintech to move with the curve and facilitate longevity for establishing a market, now competing with start-ups. Just like the rise of the smartphone, the arrival and advancement of Fintech disruptors focused on innovative technology will continue to challenge some of the most profitable markets in the financial services value chain.
For industry leaders, this understanding of the collaboration between recruiting and digital developments is integral for success in 2020. Alongside this acknowledgement of tools and insights, industry leaders must also assess the current predicted risks and changes due to digital disruption. During this penultimate year, it is vital that business leaders continually engage with internal resources, whether that is through software or restructuring the team through recruitment and promotion.
To embrace digital disruption in 2020, there are a few vital digital developments that these leaders should aim to prioritise:
Artificial intelligence (AI)
The fight against fraud and cybercrime is ongoing – in the first half of 2018 alone, UK bank customers lost over £500m to scams (according to UK Finance). While legislative and practical innovation has made significant advances in trying to alleviate the epidemic, customers and clients in 2020 will expect more effective technologies to be implemented to protect both businesses and themselves from malicious threats.
Prevention and security software that protects against malware and phishing to personal identity fraud all have the potential to put financial systems at risk through weak entry points.
AI developments aim to decrease this risk and therefore, should be utilised.
Cryptocurrency and Digital Banks
Digital disruption will create an opportunity for internal digital natives/ implementers to convince CEOs of the critical need for change across the board using reverse mentoring techniques or visits to digitally mature companies.
The popularity of cryptocurrencies amongst consumers over the past year, the rise of the banking start-up will it make it impossible not to facilitate an environment that allows innovators to look at ways to bridge the gap. The changes and progression away from traditional banking and currency models to navigate these new financial ecosystems is a development that will only increase in 2020.
Adoption of a Public Cloud
Blockchain is only the beginning for the centralisation of financial data; many companies that currently use SaaS applications for business processes, need to also prepare for a massive shift towards cloud-based computing and data storage. This move is predominately due to the decrease in the cost of data storage, allowing for ‘big data’ to be more manageable than ever before.
These new innovative and sophisticated analytics will allow core service infrastructures in areas such as consumer payments, credit scoring, and statements and billings for asset managers’ essential current account functions to transform irreversibly. However, it also reduces the barriers to entry for new FinTech disruptors, making it crucial for existing businesses to anticipate and prepare for these innovations.
When forecasting and planning with IT and Digital departments, focusing on both these trends and development will enable any size business to navigate the ever-changing industry landscape adequately.