The financial sector has changed more in the past two decades than at any point previously in history. Technology is the primary reason for this – banks have spent the last twenty years pouring money in to IT to deliver new digital services to a tech-savvy
and demanding customer base.
While areas of the financial services industry have often been accused of laggardism, it must be remembered that banks were among the first organisations to embrace IT on a mass scale, decades ago. Today, the picture has changed. The combination of mobile
devices, big data, and ubiquitous mobile internet coverage means that today’s digitisation has less to do with optimising existing processes and much more to do with empowering end users and creating brand-new paradigms.
What’s clear is that this is only the start of the financial digital revolution, with tech investment set to soar. A recent report from the Confederation of British Industry (CBI) estimates UK financial services companies expect to spend 75% more on IT in
2015. The impact of this can already be seen in the news, with Deutsche Bank signing a vast 10-year deal with HP earlier this year to re-engineer the IT infrastructure supporting its wholesale banking arm.
Financial services and trading firms realise their sector stands to benefit more than most from digital evolution and from advances in mobile technology in particular. This is an industry where the immediacy and availability of data is critical. New mobile
advances are providing new platforms for this information to be delivered more easily to both internal users and also to customers.
For instance, the recent high profile launches of the Apple Watch, Google’s Android Wear and Samsung’s Gear S have heralded the wearable technology era, and with it whole new ways of accessing information. Elsewhere, new applications and digital initiatives,
such as Apple Pay and Bitcoin, are also changing the way firms and individuals manage their finances.
The threat posed by non-FS companies entering the banking and payment space hasn’t gone unnoticed. A recent new report from The Economist Intelligence Unit revealed seven out of 10 bankers believe consumers "expect banks to provide the same quality of experience
big Internet companies provide." Indeed, the study claimed some 42 per cent of banks saw technology firms such as PayPal as a potential rival. This should act as a guiding principle for decision makers across the financial spectrum: they should see their company
as a technology business as much as a financial services organisation.
However, digitisation also provides financial institutions with an opportunity as much as a threat, so long as they are prepared to be innovative and bold. There are signs this is happening; the same Economist report also revealed 71 per cent of banks surveyed
said they considered mobile phone providers to be potential partners, and 60 per cent said they were thinking about partnering with social media firms like Facebook. However, for such dynamic partnerships to be effective, both logistically and financially,
the businesses involved will need to reach a certain level of digitisation –e.g. to handle the ensuing increased flow of data and information. While this likely wouldn’t be a problem for a social media firm, the digital infrastructure of a financial organisation
would be strained very quickly.
Despite the hype and high profile launches, wearable tech hasn’t taken off as many expected it would – leading to Google suspending Google Glass sales earlier this year. The same might soon be said of the Internet of Things, which has a long way to go before
Gartner’s prediction of 25 billion connected devices by 2020 is realised.
However, the core building blocks of the financial services of tomorrow are well known to us: data, mobility, and speed. Institutions should ensure they have these building blocks in place so they can rapidly prototype and roll-out new services. The key
to ensuring end-user or customer uptake of digital initiatives is marrying data with convenience. You can have mountains of data, or swish devices on which to present it, but should it be too great an effort to access, people are likely to give it a miss.
There may be many false starts before the winning products come along.
Endless digital possibilities
If financial firms equip themselves with a flexible digital infrastructure, capable of processing the high levels of data the next digital evolution will generate, and deliver it in real-time to a range of devices, the possibilities are truly endless.
For instance, you could set alerts to tell you when a news story or research document on a particular stock is published, which flow through instantly to the smartwatch on your wrist. From there, you could sync that content to your tablet or desktop to
come back to and analyse later. Or if you wanted, you could access additional quote data on your watch or smartphone and dig deeper into what’s happening there and then. It’s this ability to be alerted quickly to new information that helps professionals really
make sense of the markets and react quickly and confidently, turning market information into actionable insight.
While little is certain in the financial sector, we can be sure the future will be more global, complex, competitive and regulated. How companies use the information available to them will determine how successfully they navigate this progression. This explains
why attitudes to IT have shifted in recent years. They must continue to do so to ensure financial institutions make best use of the new technology available to them and meet the ever changing expectations of end users – whether they work for the institution
in question or are serviced by it.