Digital technology is driving the ever changing market, in an exponential manner. To transform the way, you are doing business is a non-negotiable. Technology is taking centre space as far as the financial services is concerned.
It is not new that technology is holding hands with the financial sector, in fact financial services has been the biggest spender on IT. However, the role that IT played in the financial services is soon changing. Earlier it was largely an enabler, taking care of automating and managing the back end processing, increasing the efficiency of the staff, it did not have a customer interface.
Digitization has changed that, today IT is being looked upon as an integral part of financial business. Technology is being considered as a channel to drive profitability and growth to the business. The right technology will offer new avenues for banks by opening revenue channels, by enabling the banks to serve more customers with diverse requirements in a cost effective manner.
Mobile banking can assist banks to reach to customers and target population in areas they could not find a cost effective way to build branches.
Cognitive computing allows banks to serve customers who require personalised financial advice but don’t have the turnout of funds like high end clients, who can afford private banking.
Digital interfaces can also better engage customers, and are also offering new services, both financial and non-financial.
Special mobile apps can help in better upsell of financial products like home loans to insurances to its existing and new customers.
And lastly by digitizing their operation processes, from manual and paper work to digital platforms, banks can further enjoy not only cost reductions and better customer services experience.
The current technology and innovation model in the financial sector is basically designed for returns in the near future. However, for long term benefits investors and financial services will need to think differently. Financial technology is a commodity, and they need to think on those lines.
While still in infancy, Distributed Ledger, Blockchain, is being coined as the future of transaction processing and settlement. And in many aspects there are financial technology firms that are challenging the very foundation on which the financial firms are pinned.
A tip is for the traditional companies is to avoid the ‘Kodak’ moment and have a foresight of the disruptive technologies, and to embrace and integrate the technology in new ways of doing business.
A financial institutions core objective, while adapting the technology should be very clear, especially at the board level. Basically any enterprise effort should meet one of the following objectives.
- Improved operations and increase efficiency
- Cost reduction
- Exploring new avenues
- Enhancing customer experience
- Mitigating risk factors
Modernisation should not be a full scale replacement of technology, as a financial services provider, it is advisable that they adapt different segmented approaches, with the effort to preserve core models, and then integrating them with the modern systems.
As difficult as it may seem, the task can be addressed with innovative approaches along with modular thinking. And most firms with clear objective have already initiated the development of these strategies and executing the implementation plans.