IT governs the way businesses work across geographies and the rules that govern IT are responsible for the dramatic shifts experienced by organisations today. With advancing digital technologies, changing workforce demographics and speed of innovation, it is becoming increasingly important for companies to evolve leadership models, redesign organisational structures and drive an employee-centric culture in order to remain relevant and competitive in the marketplace.
Singapore recently topped the table for APAC countries with the necessary building blocks to ensure businesses succeed in a connected world.
The Financial Services industry often leads the way in digital transformation, as per the Economist Intelligence Unit’s Connecting Capabilities Report. This is because of the “existing disruptive forces” in the industry driving it to change more aggressively, namely the Financial Technology sector. While the report paints a favourable picture of the industry, Deloitte suggests that businesses should also be looking to “evolve leadership models, redesign organisational structures and drive an employee-centric culture in order to remain relevant and competitive” in the face of global business demands.
Looking forward into 2017 we there will be a number of macro trends that will disrupt, but ultimately enhance, Financial Services sector:
1. User experience is king
A primary aim of most digital transformation efforts will be enhancing UX to further invest customers in the brand, and therefore increasing loyalty. This requires businesses to ensure customers have convenient interaction with the brand anywhere and everywhere.
In a bid to remove friction and make themselves more accessible to customers, some financial services players are turning into Robo-Advisers. Consumers are more open to humanless, computer-generated advice and services; especially within insurance and other financial products. However, consumers still want human interaction for advice on complex products or to deal with complaints, according to a recent study by Accenture.
The challenge for financial services firms is to balance physical presence with advanced digital user-experience. Where possible, hands-on service combined with some elements of automation will help better manage customer relationships, while maintaining a degree of personalization.
2. The proliferation of smart machines and artificial intelligence (AI)
Artificial Intelligence (AI) is continuing to become more surreal and disruptive across the market, as evidence shows machines are able to learn and adapt to their environments.
Shortly, we will see advanced learning machines replace low-skill jobs, particularly in Singapore, as government heavily invest in the National Robotics Programme; where they are developing new technologies in certain key industries like healthcare, construction, manufacturing and logistics.
There are added complexities to consider within Financial Services; however, according to KPMG predictions, by 2030 virtual assistants will have largely taken over and will inform people on both personal and financial obligations.
3. The ‘Fail fast, to succeed faster’ mentality
Proactive innovation – the idea of creating solutions to problems that customers have yet to realise – in 2017, will arguably be one of the only approaches businesses can adopt to stay competitive in today’s market.
An adaptive culture is a pre-requisite for proactive innovation; it allows new technology to be quickly and easily integrated. Businesses can swiftly move from ideation to implementation, embracing opportunities to transform and even disrupt the market, as well as internal, business models. This is why many banks and other large financial institutions have moved towards blockchain.
While Accenture suggests it could help banks cut their infrastructure costs by between $8bn - $12bn USD a year by 2025, others express scepticism over the impact the technology will have. If the outcome isn’t as good as promised, businesses would be wise to move on, putting the “fail fast, to succeed faster” mentality into effect.
4. Application program interfaces (APIs)
For people to feasibly consider new tools and technologies, they have to be able to use them through different avenues. APIs work in a similar way, opening up doors for platforms to interact together and function cohesively in a fast and flexible way; such is their efficacy, banks are looking to more API-driven strategies.
5. Internet of Things (IoT)
IoT has been part of digital transformation for a number of years, however, only recently have the insights provided offer extensive insights provided begun to truly reflect the mind of the customer. While IoT is still in introductory stages, there will be an estimated 50 billion IoT Sensors by 2020 and more than 200 billion “Things” on the Internet by 2030.
Banks are also getting involved; a Tata Consultancy Services (TCS) survey found that average IoT spend, per company, in banking would grow to $153.5 million USD by 2018, up nearly 31% from $117.4 million 2015.
For IoT to dominate the financial services industry over the next few years, Digital Transformation is imperative to surviving in the time of business disruption where, “change is the only constant” (Forbes, 2016).
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