Technology is at the core of almost every conversation I have with organizations in the insurance and banking industry as they look to optimize and transform their business operations. Interestingly, technology is no longer just an enabler for business optimization but fast becoming a disruptor of traditional business models and thus cannot be overlooked. It must be a key part of the transformation strategy.
Each industry goes through transformation in two ways – an evolution path (slow and steady change) and then an occasional revolution path (major shift). The financial services industry currently is in the midst of a revolution being led by technologies such as SMAC (social, mobile, analytics and cloud), Digital, and Robotics. The last revolution was in late 90s with the internet. Many in the FS industry missed the boat and as a result lost significant market share. Those who embraced the change reaped the rewards. Similarly this revolution will be a ‘make it break it’ for many organizations, especially in the overall challenging FS environment.
To remain competitive, financial services organizations must accept and adapt to the fact that the customer base they serve is going through a major shift in terms of buying behaviors and preferences, much of which is being driven by the digital technology revolution, particularly social media and mobile. Generation Y, for example, wants more choice and control in how they interact with a bank or insurance company, whether it be self-directed, internet-led, person-to-person, on the phone or in an office. As such, companies must transform their traditional models and products to service this growing and changing customer.
Similarly Analytics is starting to play a broader role and is being leveraged not just for the past trend analysis but also predictive analysis and real time decision making. With the Internet of Things (IOT) the amount of data now available is significant, how financial services firms leverage this intelligence as a cornerstone of decision making and intertwine with day to day processes to be more effective and efficient will be key. And with cloud-based solutions, financial services now have access to as-a-service offerings that can enable speed to market with extremely attractive cost models.
The Financial Services industry is surely seeing the impact of technology-led change either directly to their business models (for both consumer and commercial clients) or even as a secondary or tertiary impact, given it’s at the core of all other industries. While these firms have done a decent job overall of adopting newer and advanced technologies, they surely need to pick up the pace of adoption or risk losing market share to the newest entrants - or worse, becoming obsolete.