5 Disruptive Technologies Impacting Financial Services
The last 5 to 10 years has seen a number of new technologies emerge that have, and will continue to have, a disruptive impact upon Financial Services organisations. Some have created a profound impact in the way people lead their lives and this in turn influences the way they interact with the Financial Services world.
When referring to disruptive technology, we are considering advances in the use or deployment of technology to enable people and businesses to achieve things they couldn’t before. They become disruptive when their emergence, rapid or otherwise, causes a genuinely new market opportunity for those with enough vision and bravery to take it. Not all new technology is disruptive and sometimes it’s not that a technology is new but the way it’s used that causes the disruption.
Financial Services organisations are, by their very nature, cautious operations. New technology or new use of technology is often treated with some skepticism until its proven – by which time the early adopters may have grabbed a significant portion of market share.
Let’s look at some of the Financial Services oriented disruptive technologies and examine their potential usefulness and applicability.
- Mobile applications are now a dominant force in how users interact with their providers. To keep users using the application and engaged, the information the app provides needs to be accurate, up-to-date and materially relevant to the individual at all times
- Social Media provides an opportunity to gain product & service feedback from customers, an inbound and outbound communication channel through a new medium of choice, a ‘voice of the customer’ to help development of new or improved products and a view on influencers & advocates vs. detractors
- IoT (Internet of things) has already making its presence felt in the Insurance industry through telematics data for vehicle insurance or health related data for life assurance. End-point devices that effortlessly capture data, that can be consumed by providers, can drive significant value in new product development and revenue opportunity terms
- Omni-channel engagement is here to stay as traditional models of interaction are reducing. Users are looking for a superior self-driven engagement regardless of platform, technology or contact method. They are also looking for providers of the right information to enable them to make more complex decisions without help or intervention. To achieve this requires seamless, up-to-date, accurate and relevant data where siloes of data will cause this to fail
- Cloud computing has transformed many commercial business operations and has yet to achieve the same level of adoption in Financial Services. Whilst regulations may provide some inhibitors, the different types of cloud models aligned to different charging practices can ease the burden of delivery of new projects or capabilities
All of these disruptive technologies have a common factor – they all either generate or consume data in new ways. To be materially relevant in this new space requires Financial Services organisations to embrace new techniques based upon these technologies, including text analytics for unstructured data and low-latency processing for IoT data, whilst combining the best data processing practices they inherit have from traditional means.
So what’s new?
So what’s new I hear you say? Aren’t we aware of all of this already? I think the answer is yes, Financial Services is aware of all of these. The challenge is that we’re at the stage where Financial Services hasn’t really adopted many of these let alone generated significant business value from them. Many other business sectors are already reaping the benefits of these disruptions, Financial Services is not as the same stage of evolution around the potential value they drive.
Let me give some examples to demonstrate this. In Insurance we’re already seeing vehicle telematics data, as well as health & fitness data, transforming the products and services offered but only by a limited number of organisations. In banking most of the serious back office processing is still done using on-premise solutions and only some front office capabilities available through Cloud apps. So without organisations really exploiting the opportunity of these disruptive technologies, the additional potential benefit of linking the resultant data with existing sources of data is also being missed. It feels like Financial Services needs to get a little bolder in how it can generate benefit from disruptive technologies and build some tactical new capabilities to demonstrate how benefit is achieved. An agile approach, with an acceptance that failing is okay if you know how to manage this, allied to the ‘fail fast’ mentality will demonstrate to senior leaders how new sources of insight and benefit are available. This level of awareness is what is needed to unlock the purse strings for new projects.
So disruptive technologies change the game in how data is generated or consumed but the underlying data management principles still remain over how value is extracted from data. The answer to the ‘what’s new’ question is about how Financial Services need to get a little bolder in utilising disruptive technologies and quickly show how they drive benefit for the organisation.