The world is changing, it's seeing the biggest and fastest revolution of mankind. The emerge of digital devices have become the backbone of the revolution, thanks to apple and Google of the world. This has impacted all the industry domains across and financial services are not untouched. Since the emergence of industrial revolution 4 finance sector has to gear up to deliver up to customer satisfaction and expectation.
There are many challenges that the finance industry face and I have tried to cover them below
The second challenge is around having too much of data being available but not really leveraged for providing better customer experience and business benefit.
Apart from these, there is a need to follow the guidelines from regulatory bodies to be more open and dynamic to provide customer values. This is definitely pushing the institutions to adopt the market trends even faster then they expected.
Then there is a challenge hosted by new players in the industry who are changing and challenging the traditional business methods. Welcome to the word of Apple and Google where they are changing the way you do the transactions via using latest technologies and mobile wallets. That's just the start , other niche players are coming with some other disruptive innovative ideas as well. Have a look to TransferWise that is changing the way you send money to overseas and hear what their CEO has to say about "Changing the World for Better".
So what should be done by traditional players?
I believe it's all about focusing on 3 D’s - Digital | Data |Dynamics with customer centricity in the middle.
DigitalDigital is not just the need of the time but it's important for existence in the market. It's really important to adopt platform of innovations and keep the pace with the competitors. To highlight that the API Management platforms are key to this, it doesn't only provide you a medium to innovate but also provides a robust security layer to secure the transactions that are performed from outside world. I have talked a lot around Journey of Digital and it's importance, now it's time to talk about Data and Dynamics.
Data is power and financial services hold all of it. It's not only important to expose the data securely but also to understand the fast moving corners of it. Having data is important but the power of it lies when it's delivered on right time to right consumer. It's also important that you share the data with use of open API's so that innovative app ideas can revolutionize the customer experience and help traditional banks to look and compete with future banks like Monzo, Atom and Starling
Data has two major aspects -
- First is sharing the data using the digital platform and thus improving the business proposition by monetizing it. e.g share customer data with customer approval with a third party app like Mint and charge Mint for using api's to get the data. This is also a PSD2 use case.
- Second is analyzing the stream of data and use it for operational excellence and on other hand create new business products out of it. Let's see it with couple of examples -
Scenario 1 - End2End customer Payment monitoring, mitigate operational risk with real time analytics and help relieve regulatory and stakeholder pressures. Advantage is reduction in processing costs, time to revenue, full visibility and ability to react faster to changes and eliminate risks, improving customer satisfaction.
Scenario 2 - Customer transaction analysis for behavior understanding and recommending products based on that. Predictive analytics is the way to go, you can not only sell better products but also help reach next level of customer satisfaction as customers don't want reactive measures they love to know things in advance and predictive analytics tool can help you achieve both.
There are lot of products in the market both on cloud and premise. Tech giants like AWS, Google can help on cloud and players like Axway Decision Insight for operational intelligence, and open source Apache can help on-premise. There are many other niche players like DataRPM in the market as the market for data science is getting hot.
DynamicsKeep the pace with market dynamics, that's one area where the traditional banks have lagged big time. You don't want to be the Blackberry or Nokia of financial services.
Market dynamics can change due to N number of reasons -
So it's really important to quickly adopt the new emerging business beneficial changes and stay in the market competition not as a competitor but as a Leader.
It's big time for financial institutions to come out of the traditional thinking and be more innovative. Open Banking and PSD2 norms have to be seen as the model for new business and a transformation phase for Banking pushing for focus on Digital and data analytics. However, tracking innovations like Blockchain is very important as well as it's changing the way transaction happens. So it's important that Dynamics(changing aspects) are not only kept in mind but are adapted quickly to make new customer base being the center of innovation in Financial world.