By Stephane Barberet, EMEA Vice President – Enterprise Content Division at EMC
The past few years has seen a variety of attempts to take a digital transformation and disruption journey within the financial services (FS) sector. As this shows no signs of abating, stalwarts of the industry are being forced to struggle against increasingly complex consumer demands, emerging technologies, the IT skills gap, and complicated security and regulations.
To tackle these challenges, FS organisations are putting new, shiny front-line services in place, to cover up the challenges behind the scenes. They should not be – how I like to put it – putting ‘lipstick on a pig.’ For example, they should not put in place a new shiny portal without ensuring they have the right security regulations in place or the right integrated content to leverage and provide differentiation.
Changing consumer demands means the biggest challenge financial institutions are facing is understanding the complete 360-degree view of the customer and delivering against it. This is an age old problem in FSI but now with the maturity of the internet and the rise of social applications as well as peer-2-peer banking, consumers do not just expect but have access to alternative personalised banking services, through any channel, at any time, in any location and with immediacy. This presents a real challenge to retail banking organisations who still struggle with legacy platforms, and a historical banking and exchange network which they have monopolised for hundreds of years. A banking revolution is already manifesting itself propagated in part to the banking collapse of 2008 which exposed the dark side of this closed industry. Banks however, rather than seeing this as their “phoenix moment”, have largely looked to ignore the digital transformation changes happening in front of them and are only now beginning their transformation journey with urgency because of a realisation that their industry is being attacked by new entrants and alternatives to traditional banking.
All these challenges – changing consumer demands, new digital innovations, new regulations – will only accelerate the pressures for financial institutions and highlight that some of the “basics” have not been addressed properly. Whilst these are challenges, they should also be viewed as opportunities. One of the most pertinent acknowledgements to this change came from Jamie Dimon (CEO of JP Morgan) recently: “Silicon Valley is coming,” Dimon said in a letter to shareholders, which touched on technologies as varied as mobile payments, bitcoin and peer-to-peer lending. “There are hundreds of start-ups with a lot of brains and money working on various alternatives to traditional banking,” the CEO warned.
As the boundaries between traditional financial service and technology brands continue to merge and blur FSI’s future relies on its digital transformation and the investment it makes in becoming software wise. According to TransferWise, within 10 years, 20 percent of consumers will trust technology firms to supply all types of financial products and services as fintech moves from the peripheral to all-encompassing banking services. In five years’ time, around 48 percent of consumers will use a technology supplier for at least one financial service.
Financial services firms that put customers at the centre of business processes and connect information to work will drive revenue growth, improve operational efficiency, and ensure data governance and regulatory compliance. Along this journey, they need to leverage technology, including Enterprise Content Management systems, to help break up information silos, and connect data, processes and systems: getting the fundamentals right on managing a wide variety of information. This is simply a must for today’s organisations to address customers’ expectations and provide the level of service that is expected.
FSI organisations should not give in to the temptation to keep up with the industry by making rash investments in innovation. Getting the basics right will be key to successful transformation. Having the right resources in place will enable FSI organisations to connect disparate sources of data and better collaborate in order to understand the complete customer view.