By Ian Bradbury, CTO, Financial Services at Fujitsu UK & Ireland
The financial services sector is being revolutionised by technology and this explosion of new solutions has not gone unnoticed by the public. Our research found that a third of peoples said that the way they bank has changed in the last five years, and two-in-five said that technology has played a positive role in how they manage their personal finances.
The financial services sector is being transformed by technologies like the Internet of Things (IoT), Artificial Intelligence(AI) and blockchain, and innovations are changing everyday practices. For example, the Church of England, a very traditional environment, is now accepting contactless payments; whilst Metro Bank is using selfie technology to allow consumers to open current accounts online. It’s no doubt that there is huge opportunity for organisations – and the customers they serve – to take advantage of new technologies to improve their organisational efficiency and customer service.
A period of change
The Office for National Statistics recently revealed that almost three quarters of people in the UK regularly manage their accounts or pay bills online. The way consumers are spending their money is completely changing, marked by a move towards a cashless society. People no longer have to visit the bank to manage their finances. The ease and convenience of online and contactless payments, as well as a rise in the supply of innovative digital payment services from providers, means that consumers are moving beyond traditional banking.
Challenger banks are a great example of how an organisation can accommodate change in consumer behaviour and in parallel pioneer a new business model. Take the recent success of Revolut’s expansion, for example. Thanks to their ability to evolve and improve their offerings easily, quickly and at low cost, challenger banks are continuing to disrupt the world of financial services and become ever-more popular. Revolut’s success marks a milestone to the impact that technology has on the banking sector. It’s now time the financial services industry follows suit.
Over the last few years, we’ve seen many new challenger banks and fintech companies transform the sector. Now it is no longer optional for banks to have a strong digital offering for their customers. The inherited status of being a traditional bank is not enough anymore – to remain competitive, traditional banks need to ensure they offer modern services that align with the 21st century consumer expectations.
If the country’s financial services organisations are to reap the huge opportunities technology has to offer and keep pace with these incredible changes then they must adapt, and adapt fast. Ultimately, it’s consumer behaviour that has changed the nature of business models and pushed them to provide a more efficient, demand-led service. Organisations need to rapidly work out how to digitise, simplify and rebuild their processes to become more suited to this new environment.
The future is agile
The entire financial services landscape will need to think beyond just embracing technology and introduce new digital solutions. There’re broader changes that need to occur. No organisation will ever be “perfectly” set up. The speed of change that technology has on every industry means this would be impossible. Technological and socioeconomic changes will continue to happen, impacting consumer habits so the key is to be ready for whatever change comes. As the future of financial services becomes more immersed in technology, organisations must put themselves at the forefront of innovation by ensuring they are prepared to take advantage of new solutions that so many customers are looking for.
However, it’s important to remember that every business is different and will need unique approaches and business models. Traditional banks will need to know how the combination of new technology and different consumer behaviour is changing the nature of the business and how they can provide an offering that will win against competitors. But ultimately, the common denominator for every organisation is that they will all need to be agile to embrace change.
Prepare now or pay later
We are at a point of digital maturity which has enabled further innovation. Technologies like IoT, AI and robotics are moving from concept to reality and they will be driving automation in financial services. Over the coming years, we will see these technologies take hold of financial services, and they will be joined by an innovation so powerful it will change the face of the industry entirely.
Fujitsu found that in the future the financial services industry sees its biggest challenge as lacking the operational infrastructure to cope with the changes ahead (40%). If organisations are to keep up with its more flexible financial services competitors then brands need to cope with change and ensure they are set-up for sustained success and growth. But this can only happen if organisations don’t underestimate the radical change coming happen and have business model that allows the organisation to be agile.