In this highly regulated sector, IT plays a critical role, from engaging consumers to supporting secure back-office operations.
Be it banking, insurance, or any other subsector of financial services, IT is one of the biggest board room agenda items. At Mason Advisory we have an established track record in helping financial organisations find innovative ways to deliver and optimise their technology services to enable business growth and to operate in an evolving competitive and regulatory landscape.
Financial Services organisations have experienced a variety of challenges in recent years; from restoring public confidence after the financial crisis, operating in an increasingly digitised world, to competing with new non-traditional innovators of the FinTechs.
The traditionally conservative sector is being disrupted by open banking and new digital players entering the market, with the evolving risk and regulatory landscape adding an additional layer of complexity. Customer expectations are changing too, as millennials and younger generations are demanding a speedy and convenient service.
Outdated core IT systems are a significant concern for financial institutions that need to transform their business to meet changing market needs and new technology innovation. These concerns require both transformation of their existing technology landscape and creation of new flexible and stable mobile and digital solutions, that improve customer relationships, drive operational efficiencies, are compliant to regulatory mandates, and maximise cyber-security.
New digital architecture and delivery model
Having invested millions in inflexible, but robust legacy systems, traditional financial institutions are facing the difficult decision which digital transformation path to take. An incremental change or a completely radical overhaul? Do they upgrade legacy systems, buy an existing digital-only competitor, or launch their own digital brand? Whichever path they decide to take to face the challenges posed by digital competitors and changing customer expectations, the change in technology must go hand in hand with a careful rethink of their business and technology strategy and delivery model in order for the transformation to be successful.
Open banking and business model innovation
With open banking rules requiring banks to share data with authorised third-party providers via open APIs, the sector has opened to FinTech start-ups which can create innovative new experiences for customers. At the same time, open banking puts pressure on established banks to invest in their own experiences to maintain competitiveness in the market. Open APIs are also enabling banks to refine their role as marketplace operators, product manufacturers or distributors. In the distributor model, banks and non-banks can collaborate to create new value, especially through innovative use of channels.
Authentication and fraud prevention
With phishing emails and baiting scams on the rise, financial sector organisations have stepped up their efforts to improve customer authentication through two-factor authentication (2FA) and multi-factor authentication technologies. Real-time fraud prevention and detection tools are being adopted to further boost security. However, additional layers of security can often generate new friction during user journeys. The next innovation challenge is to build authentication models which are aligned with the customer journey and incorporate intelligent forms of authentication along the way.
Blockchain’s move to mainstream
The use of the blockchain ‘public ledger’ is set to become an integral part of financial institutions’ technology and operational infrastructure. As the technology and its use cases continue to evolve and progress, blockchain is empowering financial institutions to drive greater transparency, traceability and operational efficiency for a multitude of business transactions and contracts. Possible areas of use include payments, intercompany settlements, tokenization, syndicated loans, etc. While financial institutions are exploring how to fully benefit from or deploy blockchain, it is important to identify the right product opportunities, and assess risks and corresponding controls.
The combination of automation and predictive analytics is creating new opportunities to reinvent the customer experience. By leveraging extensive customer data, machine learning and smart automation tools, agents and advisers can quickly guide their clients to solutions and products that suit their unique needs. Even more sophisticated engines go beyond this by accurately predicting when customers will need certain products and how they will want to engage with them. This is an amazing opportunity to unlock new insights in order to give customers what they really want.