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It is clear that technology is affecting financial services in a multitude of ways.The pace of change is increasing and shows no sign of slowing. Financial institutions are looking to the IT organization to do more to help make sure they are well positioned to succeed in the future. There are macroeconomic trends sweeping the world, and technology-driven influences buffeting the industry. But what will be the best approach to moving forward? There are few of the priorities for success for 2020 which can be as under:
Whichever direction one chooses, one will need to devise a clear strategy to move forward. And mostly, there will be a requirement to partner with innovative Fin-Tech start-ups and change their business practices based on lessons from other industries. One will certainly need to maintain a laser-sharp focus on their customers’ preferences, both stated and unstated. Frankly, each priority is important. The good news is that each one is also achievable. The combining tactical short-term actions with long-term initiatives that tie to a larger, strategic vision. This is how financial services firms will succeed in 2020 and beyond.
The new market entrants found it difficult to break into the financial services industry. The large, well-established financial institution that we call ‘incumbents’ had advantages in size and their networks added a multiplier effect. Which has compliance systems in place to manage ever-increasing regulations, and they had the client base and resources to prosper even in tough economic conditions.
By the year 2020, consumers will need banking services, but they may not turn to a bank to get them. Or, at least, maybe not what we think of as a bank today. The sharing economy may have begun with cars, taxis, and hotel rooms, but financial services will follow soon enough. In this case, the sharing economy refers to decentralized asset ownership and using information technology to find efficient matches between providers and users of capital, rather than automatically turning to a bank as an intermediary.
In the year 1990, where the companies began to recognize the Internet’s potential power, e-commerce investment and experimentation soared. And despite the ‘dot-com crash,’ it is unlikely that anyone would deny just how revolutionary the technology has proved to be. In today’s time, there are curious similarities with block-chain— both in how companies are being funded and how they are exploring use cases.
Two decades ago, many large financial institutions built ‘e-business’ units to ride a wave of e-commerce interest. Eventually, the initial ‘e’ went away, and this became the new normal. Internet development and large technology investments drove unprecedented advances in efficiency.
Do you know what your customers value? Are you sure? Customer intelligence used to be based on some relatively simple heuristics, built from focus groups and surveys. Which were proxies for real, individualized data about consumer behavior, and the results were pretty hazy? Now, technology advances have given businesses access to exponentially more data about what users do and want. Which was a good opportunity for whoever can use analytics to unlock the information inside, to give customers what they really want?
When ATMs were first introduced, many customers refused to use them. Gradually though, after time and training, they came to see that ATMs could offer a better service experience. And trust followed.
As significant as the shift toward cloud-based computing has been, it is just getting started.
Financial services executives are already depressingly familiar with the impact that cyber-threats have had on their industry.
America’s reputation as a technology juggernaut is so ingrained that it can be easy to miss the globalization of innovation. But if one happens to look behind the social network or the router that sends the email, one will quickly see how rapidly things are changing everywhere.
The use of technology and its implications are not limited to financial institutions.
To benefit from these technology developments, we recommend that financial institutions focus on six key priorities
Financial institutions which consist of the lot on their plate emerging competitors, shifting demographics, rising customer expectations and changing regulations. Technology offers solutions, allowing financial institutions to cut costs and become more efficient at what they do. But this is tricky because it is a classic ‘limited time offer’. Most technology is not proprietary, so it is a bit of a race: if one blink, one might find that the competition has already built up advantages that are now harder for the one to match.
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