May 12, 2017 | Written by: Ron Lefferts
Categorized: Banking | FinTech
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(L to R: Patrick Lane, Banking Editor, The Economist; Nick Bostrom, Founding Director of The Future of Humanity Institute)
We’ve been long saying that financial services firms today are undergoing a radical transformation. From pressures around data security, a constantly evolving regulatory environment, and disruptive new players (fintechs)—all amplified by cost pressures and diminishing margins—it’s clear that business models need to quickly adapt. To further complicate the landscape, customer expectations continue to evolve, as they anticipate seamless service and experience across brand touchpoints.
In an industry, where the never-ending battle is for customer experience, loyalty, and top talent, what are the ways in which incumbent firms can reinvent their businesses? On May 2 we hosted an event with the Economist, “Reinventing Financial Services” to convene clients and industry experts to discuss just that. Here are three takeaways from the event:
AI will amplify your workforce: AI is on the rise, firms and their employees will benefit greatly from it. According to futurist and New York Times bestselling author, Nick Bostrom, the world’s leading machine learning experts believe that there is a 50% probability that computing systems will achieve a human level of intelligence by 2040. But this does not mean that workforces will be replaced with new technology. Rather, AI and cognitive computing stand to augment the skills and expertise of individuals within a firm by harnessing their collective knowledge, and reducing the manual tasks associated with many roles—which allows employees to focus on higher-level tasks that require a human touch.
L to R: Patrick Lane, The Economist; Ashley Johnson, COO & CFO, Wealthfront; Adam Ludwin, CEO, Chain; Chris Smith, EVP and Global Head of Operations, MetLife; Chris Ferris, CTO – Open Technology, IBM
There’s clarity in customer focus: A key advantage that emerging disruptors hold is their ability to home in on select customer pain-points. Their clarity of vision, purpose, and ability to stick to core competencies—without the distractions of competitors or established growth targets—allows them to take a focused approach to solving customer issues. This also leaves them nimble enough to test and iterate on solutions quickly. Their challenge, of course, will lie in how to sustain that focus as they expand services and product offerings under growth pressure.
Incumbents and disruptors must collaborate: Competition and collaboration are not mutually exclusive pursuits. The cultural strategy, nimble operating models, and traction with niche customer bases mean that emerging fintechs can help established firms penetrate new and adjacent markets. Conversely, emerging disruptors stand to benefit greatly from the established brand credibility, financial data, and expertise on regulatory matters.
Want to learn more about how banking institutions can adapt to the evolving marketplace? Read our recent paper from the Institute for Business value, Radical transformation in financial services.
L to R: Douglas Russell, Managing Director, MassMutual Ventures; Zach Perret, Co-founder & CEO, Plaid; Patrick Lane, The Economist; R.A. Farrokhnia, Executive Director, Columbia Business School; Lena Mass-Cresnik, Head of Global Innovation, BlackRock, debate the benefits of collaboration vs. competition between fintechs and established firms.
L to R: IBM Panelists Ron Lefferts, Managing Partner – Financial Services, IBM; Mark Sullivan, Banking FM Industry Leader; Jon Walheim, VP & Partner, Insurance Industry Leader; Ellen Yoon, Partner, Global Cognitive & Analytics Insurance Leader; Barry O’Connell, VP FSS Digital Strategy & Interactive Leader