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Embracing disruption to drive positive change in financial services
By Ian Bradbury, CTO for Financial Services at Fujitsu
The past decade has witnessed some of the biggest technological shifts ever seen in the financial sector; from the adoption of online and mobile banking to more innovative concepts such as blockchain and quantum technology. Much of this change was seen as an enormous disruption to the status quo for banks and insurers, but the last few months have proven that there is only more disruption to come.
The global spread of the coronavirus has stunted growth, closed high-streets and sent worldwide economies to a grinding halt. What this means across financial services is that traditional organisations are being completely turned on their head. Frankly, traditional is being thrown out of the window for a ‘new normal’.
Thankfully, the work we have done as an industry to integrate new technology into banking services across the last 10 years stands us in good stead to weather the storm. But future success relies on IT leaders embracing the uncertainties and using the seismic shifts we’ve seen in consumer behaviour as an opportunity to grow their business, rather than a reason to batten down the hatches.
While the initial shift away from bricks and mortar stores for customers was done in the pursuit of convenience and immediacy, the pandemic has accelerated this and created an even greater need for simple, easily accessible digital banking services. And challenger banks, in particular, have stepped up the challenge. For instance, Starling has supplemented its regular services, like its 24/7 in-app chat, with various Covid-19 resources to support savings accounts, prevent fraud and even provide tips on how to work from home effectively. It’s the perfect example of being able to pivot and cope with rising online demand.
Preparing for the unknown
As high-streets around the world closed, challenger banks stepped up to the plate and became the go-to for many consumers. The move away from cash was necessary – to stop the spread of the coronavirus – but it was overdue for many who had already been preparing for the shift towards digital services; according to our research, nearly three quarters (73%) of business leaders believe technology will be vital to their future success indicating a strong need to adopt fintech.
Take wealth management firms. Commonly a business based on building a relationship with individuals, we’re now seeing a shift towards robo-advisors that provide online assistance. Last month, ITI Capital launched a robo-advice service to encourage investors and grow the business. The managing director even went on record to say the company had to “make up for lost time,” when discussing the influence of technology.
Rarely do you see leading organisations publically admit they are behind the curve of technology, but such is the widespread disruption of Covid-19 that technology has been thrust into the limelight. The same can be said for the traditional ways that banks make money. In the banking world, foreign exchange fees are disappearing as the likes of Monzo undercut competitors by introducing fee-free spending abroad. These initiatives are forcing organisations to adopt technology quicker than ever. But that’s a good thing…
Turning disruption into growth
Financial institutions will have one thing at the top of their agenda – working out how to generate a return of profit while also considerably cutting costs post-Covid-19. This doesn’t only apply to traditional high-street banks; challenger banks have also found themselves in the same position.
These digital-first banks may have experienced initial success because they were a low-cost alternative to the Nationwide, NatWest RBS and Santanders of the world. But our research last year found that the British public wasn’t quite ready for change, with two-fifths (40%) not trusting challenger banks at all.
In a post-Covid-19 world, consumers are only going to demand more from their financial institutions as they navigate the economic impacts of the pandemic; and trust will be at a premium as people gravitate towards banks that can promise safe, secure and reliable services. And it will be the financial services organisations that can couple trust with slick digital services that will the ones to come out on top.
Technology driving cultural change
There is zero doubt that Covid-19 will create not only lasting changes to consumer behaviour, but also to how organisations operate. For example, Nationwide staff made 2.5 million calls during lockdown via video conferencing tool Teams, to host virtual training sessions, host daily meetings and deliver key product news. It’s a significant shift for a company that has operated with a high-street first mentality for many decades.
Yet remote working introduces a new way to have different workforces, a workforce that is built for the future; one where Covid-19 will likely remain as a threat.
It’s a wider change that needs to be embraced now. It’s a culture change that supports a brave approach, one that gradually shifts towards agility and innovation. Moving from a slow, very cautious and risk-aware business to a digital business.
Disruption can be positive, if organisations embrace, learn and adapt to the ‘new normal’.
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