In the earliest days of digital transformation, the financial services industry was under fire (Digital Disruption in Financial Services). Large, incumbent financial services firms were criticized for their inability to adapt to disruptive technologies while they were also trying to recover from the economic crisis of 2008.
Heading into 2020, financial services leaders have significantly improved their approaches to digital transformation. But there’s still plenty of room for improvement.
One study found that just 39% of the financial services industry has been digitized. Your ability to get ahead of the industry will depend on how well you can address the tech trends influencing financial services in 2020 and beyond.
The balancing act between regulation, security, and innovation will be a constant challenge for your digital transformation. However, with the right approach, you can make the most of emerging technologies to transform your business.
How Financial Services Technology Trends is Transforming in 2020
How quickly can you move from new idea to customer-facing product? At a time when speed to market is everything, just 54% of financial services firms say they can launch new products and services within one to six months.
The siloed, legacy infrastructure that has proven so reliable for decades now holds you back. The best laid digital transformation plans won’t succeed on the back of traditional systems and operations.
That’s why four key transformations will drive financial services decision making in 2020:
- Competing on Customer Experience: Digital natives and upstart fintech companies are already leveraging the latest technologies to provide stellar customer experiences. By building omni-channel experiences that provide easier access to services, these disruptive players are giving consumers plenty of reasons to leave incumbents. Traditional financial services firms can’t just implement new technology for the sake of new technology—they need to transform fundamentally with a focus on customer experience.
- Driving Revenue, Not Just Optimizing Costs: For years, new technology has been treated as a means to optimize costs in financial services. Revenue growth challenges were masked by improvements to the bottom line thanks to cost cutting maneuvers. Optimizing costs is important, but 2020 is the year to refocus on implementing technology to create new revenue streams.
- Increasing Efficiency and Competitiveness: If it’s still taking your business six months or longer to launch a new product or service, you risk competitors winning early market share that you may never get back. Big data analytics, artificial intelligence, cloud computing, and other innovative technologies don’t just drive better customer experiences—they make go-to-market processes more efficient and help you gain competitive advantages.
- Staying Ahead of Security and Compliance Challenges: Customer data isn’t just something you analyze to improve products and services—it is the product. But with that comes an ever-growing responsibility to protect systems and data from cyber attacks. And regulators are putting the pressure on with standards like GDPR and PCI DSS. To stay ahead of sophisticated attackers and maintain compliance, you’ll need AI-powered, real-time insights that go beyond traditional signature-based defenses.
All of these transformational challenges come down to one key idea, according to Dan Cohen, Senior Vice President of Financial Services and Insurance at Atos:
“Banks are at a crossroads. Continuous finTech innovation and new technologies such as blockchain are disrupting the market. While it creates threats, it also opens multiple opportunities to financial services to reinvent themselves and thrive.”
If you want to reinvent your financial services business for success in 2020 (and beyond), you’ll need smart investments into the technologies shaping this industry’s future.
Four Tech Trends for Financial Services in 2020
So many business leaders (both in financial services and other industries) talk about the need to be customer-centric today. But sometimes it’s not always clear what that means.
For financial services, being customer-centric means shifting your mindset when it comes to new technology. You used to focus on how new technologies would benefit the backend of transactions. Now, the focus shifts to how new technologies will ultimately benefit customer-facing products and services, which will then drive revenue in return.
But with so many tech solutions to evaluate, it can be difficult to know which ones will positively impact your business. In 2020 and beyond, these four tech trends will be most critical for financial services transformation.
1. The Rise of Hybrid IT
Making a wholesale, rip-and-replace shift from legacy IT to cloud computing isn’t realistic—especially for incumbent financial services firms with complicated infrastructures.
Instead, transforming financial services will be about finding the perfect mix of traditional, on-premises IT, public cloud computing, and private cloud computing. Leveraging a hybrid cloud strategy will help you balance cost efficiency and agility with data privacy and protection.
And, by keeping core components of your legacy infrastructure in place, you’ll be able to modernize operations and customer experiences without sacrificing reliability.
Embracing a hybrid IT model gives you the best of both worlds—on-premises control and security with the agility and scalability of cloud computing. Reinventing your organization in this way will prepare you to take advantage of both today’s innovative technologies and those on the horizon.
2. 24x7x365 Security Operations
The set-it-and-forget-it days of cybersecurity are long gone. Deploying a firewall, installing anti-virus software on endpoints, and staying ahead of patches are just small pieces of a much larger battle.
Attackers become better at evading cyber defenses every day. One misstep can result in a data breach that cripples even the largest financial services firm. Your security operations center has to be just as agile as the rest of your organization.
To meet this need, advanced analytics, real-time monitoring, and artificial intelligence are becoming the norm in cybersecurity. You don’t just want to react to cyber attacks—you want to proactively address vulnerabilities and potential threats before they cause problems like a digital disruption in financial services.
For many financial services firms, cybersecurity is consuming too many resources and taking away from innovation. That’s why managed security services are becoming so much more valuable.
3. Get More Out of Data with Artificial Intelligence
For a number of years, big data investments were all about collection. The more data you could collect and organize, the more customer insights you’d have at your fingertips. And even though analytics solutions have grown increasingly powerful, there’s much more data than most firms know what to do with.
Artificial intelligence, machine learning, and cloud computing give you the tools necessary to turn all that structured and unstructured data into revenue-generating insights.
The benefits of AI extend to both backend processes and your customer experiences, including:
- Automated processing of low-level, transactional tasks
- Generating real-time insights for customer interactions
- Connecting gaps between existing data silos
- Identifying anomalies in datasets that could point to cyber attacks or non-compliance
Implementing AI-based solutions won’t eliminate the human aspect of your business—it will take over menial tasks, improve productivity, and enhance human processes with greater efficiency.
4. Revamping Workforce Collaboration
Delivering better customer experiences starts with giving your employees the tools to improve productivity and engagement.
Consumers expect omni-channel experiences across your website, email, social media, instant messaging, phone calls, and in-person interactions. However, many financial services firms run into regulatory issues when trying to go beyond traditional collaboration technology like email and legacy content management systems.
Introducing new communications and collaboration tools to your organization can make all the difference in workforce productivity and customer service. Working closely with IT to make this transition as smooth as possible is critical. But it’s just as important to remember that implementing modern collaboration tools isn’t just a luxury—it’s a necessity to meet the expectations of your customers.
Bridging the Tech Gap in Financial Services
The looming need for digital transformation is no longer a surprise for financial services leaders. That doesn’t mean it’s easy to bridge the gap between the systems you have today and the technology that will transform your business tomorrow.
This isn’t a problem (Digital Disruption in Financial Services) that you can solve by increasing your digital transformation budget. Many organizations lack the internal skills to implement new technologies, address the latest security threats, and keep up with data privacy regulations. And as technology continues to change rapidly, it may seem like you never have a chance to catch up.
In 2020, it’s imperative that you make emerging technology a core competency for your business. That’s why we put together this checklist. Download it now and discover the 3 Critical Security Tips for Financial Institutions to stay ahead of the digital transformation of 2020.