Digitisation, urbanisation and globalisation are a few of the modern megatrends forcing people to change – pushing companies to embark onto digital transformation. With the exponential growth of modern technologies, today’s hip and success might not even be around 10 years from now. For such reasons companies have to constantly reinvent themselves, listening to their customers’ needs. However, ability to change requires self-criticism, digital frame of mind and plenty of patience.
Too fast too furious digital road trip
The key to success used to be so simple and summarised as follow: cost or quality leadership. Nowadays, as the market widens, things are much more difficult and complex. In the digital world, every company has to work out its USP, where this value proposition fits into the value chain, and how the business differs from its competition in ways that are tangible. Trust has become MVP as well as how longstanding trust can be translated into the digital world.
Part of the huge opportunity created by digital transformation lead to self-cannibalisation. Whilst embarking on digital transformation, you have to analyse the purpose of your business and ask what you’re there for in the first place. It’s healthy to question your own revenue model and strategy, because if you don’t do it yourself, someone else will. Consider the raise of the newcomers such as Netflix or N26, whose digital platforms have replaced conventional intermediaries to disrupt industries through technology and digitalisation. By challenging themselves, companies can set the pace of innovation and progress as well as perfecting their own competitive agility to compete and gain market share in aging industries or against the ones reluctant to change.
Another major aspect to change generated by digitalisation is the fast paced economical environment this has created. Companies that have found their feet in digital come up with ideas quickly, translate them into prototypes quickly and learn from their mistakes quickly. Such motto of: launch fast, fail fast, learn fast” has given birth to new industry sector, such as Fintech or Insurtech that are disrupting the good old fashioned industries and challenging them to adapt to the continuously growing tech savvy client base.
Can digital lead the way to new Financial Services model?
In many companies, it is the management or boar of directors that have their say, rarely employees, never mind the customers. This is something that is changing as digital transformation continues and a feedback centric culture becoming more and more centre of attention. A digital corporate culture requires strong leadership that sees the business as a whole and manages to create a common understanding of what it means to be digital. This leadership needs to be able to turn anxieties about imminent transformation into enthusiasm and risks into opportunities.
However such trends are also impacted by regulatory changes. Financial services’ executives devote so much time to adapt to new regulations that they barely have time to assess the latest innovation and their impact. It would not be such a bad idea for them to keep a close eye on trends and try to understand them.
In the case of peer-to-peer lending, crowd funding, inter-connected people do not need a third party (i.e. top tier one bank) to borrow, lend or invest. This could truly revolutionise financial services, especially in Emerging countries, where global transformation is fed by a high share of the population educated by smartphones rather than traditional markets.
Artificial Intelligence (AI) is still not taken seriously; nonetheless the first robo-advisors are already servicing simple investors profiles. To another extend Artificial Intelligence could also transform back office and middle office work to become autonomous.
The field of Data Analysis is also an important one. Banks and Insurance always held tons of unexploited data. Due to the pressure on margin and a competition coming from the Fintech and Insurtech, more driven towards consumers, financial services industry has to learn how to analyse and interpret big data to better know their clients.
One last example is the Blockchain technology and crypto-currencies. We should take the time to think of the potential offered to Emerging economies that do not have a stable currency or cannot trust a central bank and the benefit such technology could bring to those populations.
Customer back on centre stage
Finally, customer experience emerges not on the basis of the organisation’s internal view but in dialogue with customers themselves. Fintech understood this better than most of other industries wanting to go digital. Disruption has not only come from a technological stand-point but also by understanding what stimulates users or consumers, which media are they using and what put them off.
Such strategic vision in terms of technology is key for any financial institution that wishes to last in the coming decades.