The financial services sector is no stranger towards change. The industry has traditional roots but has changed their position since then many times over – mostly by the development of the economy and new technology.
But the sheer amount of change we are seeing today is unprecedented. There are so many things shifting at the same time.
Regulation and compliance, for example, is evolving rapidly. The financial industry is under increasing governance, and new rules are being introduced all the time.
Meanwhile, the growing trend for open innovation in business and industry is pushing the financial sector towards open banking. New pure-digital challengers without branches and strong customer interaction take parts of the market. This again is challenging the financial sector’s status quo.
On top of this, there’s the onset of new technology like artificial intelligence (AI) (see my article on this here – LINK) the cloud, both of which are changing finance even further.
With so much change occurring at once, banks and insurers need to adapt – or risk becoming obsolete.
At the same time, banks can’t afford to spend too much time internally trying to keep up with the changes, because they won’t be able to focus on their priority: the customer.
In this fast-paced landscape, agility is crucial. But what does agility mean in relation to financial services? In this blog post – the first in a series exploring the theme of agility in FS – I’m going to explain.
Changing customer expectations call for agility
Staying connected to their customers is essential for banks to stay relevant. This means they need to be present wherever their customers are, on any platform, at any time.
This is making direct communication through mobile apps hugely important. Already apps are the main way that customers speak to their banks. I wonder, for example, how many people even know where their local branch is if they had to find it?
Physical connections through what we call customer touchpoints like ATMs will start to play a new role in the relationship between banks and their customers. They will become a site for customer interaction, which banks will also use to deliver other services.
But otherwise it’s going to be a digital-first service. We’re seeing this strategy from several banks already.
And people’s expectations for digital services are being set by the customer service they receive in the non-banking world. Retailers are investing huge amounts in order to provide an immersive, seamless experience for their customers, and banks have to be able to match it.
One of the things customers expect today is for all of their accounts to be totally connected. They want to have an integrated view across all their accounts, even those with different banks.
At the moment insurers and banks keep their data separate from one another, often with internal information silo’s. Changing this will require a new open banking architecture for core banking systems based on cloud native development and API banking – making agility all the more important.
Agility enables innovation
Financial service organizations are starting to take a different approach towards their IT infrastructure, starting with new expectations for IT providers.
It used to be a case of outsourcing: you called in an IT provider for four, five, maybe even ten years, and they did the job as you initially agreed, no questions asked. But now the lines between providers, partners and customer are blurring, and customers expect providers to be more proactive, to work together, collaborate, and engage in multi-sourcing.
We refer to this phenomenon as ‘agile contracts’. At Fujitsu, we’re absolutely committed to agile contracts – so much so that we’ve actually re-written current contracts to make them agile – as we believe it delivers hugely in terms of innovation.
In freeing the customer and the IT provider from the constraints of traditional contracts, agile contracts enable a greater degree of collaboration a better fit with the needs for financials – and an enhanced form of innovation.
The best innovation comes from a digital arena, where these new capabilities and services are co-created together with us and our partners – this is something I’ve written about before.
An agile future ahead
Financial services is an industry on the move. It’s exciting to see how changes in technology, customer expectations and collaboration are shifting the emphasis in the industry towards agility.
What would an agile financial services sector look like? In the next blog post in our series, we’ll find out.
Make sure to check out the next installment in this series on agile financial services, coming soon on the Fujitsu blog.