Introducing the Fujitsu World Tour morning panel session on the future of financial services, the BBC’s Ben Thompson retraced the past decade and a half that he’s spent with the broadcaster.
The past year, he said, has been unlike any that have come before it. The defining differentiator? Change: the amount of it and, more significantly, the pace at which it’s occurring.
Unpredictability and uncertainty, Ben went on, are the watchwords of the day – whether in the context of what’s happening with Brexit or across the pond in the White House, or simply on our local high streets as disruptive digital competitors increasingly enter the fray.
What is certain, though, is that there’s more disruption on the way. Everything we take for granted, said Ben, is likely to change.
This is as true for the financial services industry as any other. And when disruption comes, it’ll be in a form that goes far beyond using a smartphone app to do your banking.
Data is where the value lies
The businesses of tomorrow, Ben argued, will be built on data.
The new generations of consumers expect (if not demand) flexibility, and data is a tool that can be utilised to offer this.
For banks, this means offering bespoke products – whether in the case of different, specific interest rates or more personalised products – in a way that traditional lenders simply haven’t yet been able to offer.
With rafts of customer data available to banks, the ability to work off a more accurate picture of how best to serve a customer is increasingly within the realms of possibility.
And as of next year, the Second Payment Services Directive (known as PSD2) could lead to a real revolution in how we bank. The ability to free up or share data more readily will create huge opportunities for innovators and disruptors – including established tech players in other parts of the industry, like Google or Apple – to move in and bring new products and services to market.
The challenge, Ben explained, was for the established bodies in the financial services sector to make full use of their first mover advantage – something highlighted in our Fit for Digital study, which found that the industry needs to respond quickly or face disaster.
It’s all about understanding your customer
Sitting on the panel, Anthony Duffy, Fujitsu’s director of retail banking in the UK and Ireland, couldn’t help but agree with Ben’s comments.
What we’ll see in the next ten years, he said, will make the past decade pale in comparison. Open banking, driven by PSD2, will certainly have an impact – but, much like with the introduction of the smartphone more than ten years ago, it’s not yet clear what that impact will be.
From an insurance perspective, data will be paramount, said Mark Boulton, who leads Fujitsu’s insurance sector in the UK and Ireland.
This will particularly be the case when it comes to being proactive about responding to customer needs. The more recent major disruption of the insurance sector (led by aggregators) has finally been adjusted to, and now the key will be using data and the technology behind it to provide a more on-demand, personalised service.
Insurers, he said, need to work harder to put themselves in the place of the consumer – and adjust to this on-demand expectation.
Indeed, whether in the case of banking or insurance, the customer experience is becoming even more important, argued Ian Bradbury, CTO for Fujitsu UK and Ireland’s financial services business.
The big disruptors have proven themselves over and over again when it comes to delivering a journey that delights customers – this, he went on, will be the biggest threat to the established players.
Security of course is a massive part of all of this, said Fujitsu cyber security specialist, Alex Shearer.
All of our predictions with regards to there being more cyber attacks, phishing scams, and malware outbreaks have come true. This is now the new normal, and it’s a case of when these things occur rather than if.
With this, and the drive to embrace a more flexible digital approach, comes the need to properly educate staff and involve security personnel as early as possible when it comes to developing new products, services or infrastructure.
It’s more than a financial services issue, Ian Bradbury agreed, and what’s holding back digital transformation more broadly is not caution around security but culture and a latent attitude that disruption ‘won’t happen to us’.
Regulation changes will aid this required culture shift, said Mark Boulton, and consumers have the power to be at the driving force of this too, as established organisations are forced to respond and deliver that more bespoke experience.
Once people – and this applies to both customers and financial services practitioners alike – begin to understand the value of their data, the tide will truly shift, concluded Anthony Duffy.
The challenge for us will be to match the speed of that shift. A challenge we’re more than up for meeting.
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