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Trends in Financial Services

Trends in Financial Services

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Digital Transformation Adaption or Extinction

18 October 2017  |  9263 views  |  0

Charles Darwin’s research showed it isn’t the strongest of the species that survives, nor the most intelligent, it is the one that is the most adaptable to change. This sentiment may have come to light in the 1800s but still bears great relevance to modern business, especially in the midst of the digital age.

When it comes to explaining the concept of ‘Digital Darwinism’ or digital disruption, people require case studies they can relate to; one such as Blockbuster. A company once an icon for the video rental industry, it failed to adapt to the demands of a digital world, was reduced to the least profitable movie distribution company in the US, and now the likes of Netflix, Amazon and HBO dominate its market.

The lesson is digital disruption has affected organisations all over the world. Whether it’s cloud, machine learning or AI, no industry or line of business has been immune from digitalisation – especially financial services, where disruption is forcing established players to innovate to keep pace or risk losing out to agile competitors.

Financial Services has been slow in its uptake of cloud adoption – risking failure to meet customer demand for faster delivery of product innovations, personalised services and more efficient operations. 

Customers are increasingly focused on cost reduction and flexibility, and the banking industry is no exception. Simply look at UK’s Faster Payments; not only does the payment arrive in seconds the fees being charged by the banks for this service are falling dramatically to almost, if not free. So, having your own on premise system, security, IT and data centres is no longer an option because of the inherent cost base.

Despite the clear advantages of moving to the cloud, Financial Services is lagging other industries. Banks are hampered by the rigidity of legacy systems often from the last century. The ever-evolving regulatory landscape has added to the complexity.

There is light at the end of the tunnel as the European Banking Authority (EBA) sets out guidance for the use of cloud by financial institutions. This clarity reduces the anxiety around cloud, especially with the regulators, and sees the adoption of cloud initiatives becoming a case of when, and, not if.

IDC predicts that the industry will react to this shift, finding that by 2018 more than 85% of enterprise IT organisations will commit to multi-cloud architecture. That is not simply one ‘Public Cloud’ but many ‘Clouds’ working together. Banks must service customers impeccably on a day to day basis while providing fast, new mobile services. Multi-cloud is the future and the customer will only see and care about the value of the service.

Darwin would have understood this as Digital Darwinism accelerating evolution.

 

  

 

TagsMobile & onlineInnovation

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