Digital Transformation Trends in Financial Services
Firms are realizing that tech talent is key. Tackling new digital efforts with current IT staff can be a challenge. Stoic architecture must first be upgraded before heading down the digital path. Building a solid tech foundation is step 1 for industry laggards.
Digital transformation consulting firms insert cutting edge experts into IT groups, upgrade architecture, and help teach and manage change. This type of consulting is now valued at more than $44 billion globally. This spending results from financial firms using outside experts to navigate the latest trends in tech.
Today’s common theme centers around building a more fluid, elastic structure that is scalable and efficient for organizations. Throughout the process, consulting firms train existing staff on modern technologies and automation. This “thought leadership” process creates value long after consultants have exited the project.
A successful move away from antiquated architecture results in new workflow that can take advantage of automation and cloud technologies. Upgraded IT departments can maintain and continue pushing the digital innovation process forward.
Technologies being targeted now and in the future:
Nearly half of financial service companies are embracing data analytics and cloud technologies. Most believe these components are foundational in an increasingly competitive digital market.
Tech firms like Amazon and Google are moving into the financial services space. Traditional corporations are increasingly partnering with vendors to re-bundle services and compete. The siloed approach of old is depleting. Creating an encompassing customer experience and addressing the entire ecosystem is the new objective.
Nearly 40% of financial firms will be investing in blockchain technologies in the next 3 years. The result should be increased transaction integrity. Artificial intelligence is being embraced to create improved customer experience. Robust competition is resulting in 40% of all tech budget to be targeted at digital innovation. The result: in excess of $2 trillion by 2019 in enterprise spend.
Mobile driven world:
50% of financial customers have not stepped into a bank in 6 months or more. The push is directed to mobile. Establishing a mobile platform where customers can accomplish all their financial needs with the most ease and efficiency is the goal. Mobile banking, mobile pay and mobile applications are replacing brick and mortar financial locations at a rapid pace.
Cloud architectures allowing for flexibility is the new normal. Consumers want 24/7 access to their financial needs and less human interaction. The increasing trend has bots answering customer questions, not humans. Collecting big data and analyzing it allows companies to make smarter mobile applications moving forward. A wide variety of mobile solutions will keep companies relevant in this digital era.
IT leaders now understand that addressing the entire ecosystem of consumer needs is the path forward. Retail establishments are being forced into the mobile payment space. Financial institutions are beginning to view their brick and mortar establishments as overhead rather than revenue generators. All of these trends fuel the push to mobile.
Data security is a major concern:
With data moving more and more to cloud providers, financial institutions are focusing on data security. The digital era accompanies a new kind of criminal; identity theft and data breaches lead headlines.
As companies transform, they continue to be mindful of using innovation as a way to increase security. Blockchain is young in adoption, but offers ways to eliminate the middleman in complex transactions. Institutions are beginning to understand its future importance.
Although digital currency prices have faltered in the past year, blockchain technology is not forgotten. In the next 3 years many financial institutions plan on using blockchain to increase transaction security and integrity. All of the possible applications of blockchain are continuing to be explored. As firms continue to move forward with their digital initiatives, they continue to be focused on security and data storage possibilities.
Financial service executives are embracing IT innovation and early adoption:
In the past, executives have treated IT departments as second-class citizens. In the digital era, C-level teams are embracing IT as their future. CIOs and CTOs sit alongside other executives to discuss corporate strategy.
Concrete locations are being phased out and mobile solutions are being ushered in. Both technology innovators and early adopters realize that they must transform digitally to meet customer demands. Ignore the latest and greatest at your peril!
In the new world, disruptive technology can offer overall efficiency and top line revenue growth not achievable by growing physical assets. Bringing in trusted partners who are experienced in digital transformation is becoming the norm.
Larger percentages of overall company revenue are being reinvested to upgrade architectures and grapple with new competition. In the modern era, technology companies continue to flood the traditional financial space. Financial services companies have to become more like their tech-savvy competitors to survive moving forward.