New Realities of Digital Competition in Financial Services

19 Oct

New Realities of Digital Competition in Financial Services

IDC Lawrence Freeborn
Lawrence Freeborn
Research Manager, IDC Financial Insights
Read full bio  @IDCLawrence

The recent IDC Financial Services Forum 2017 (London) focused on the topic of open financial services. Ushered in by regulations and the new realities of digital competition, the financial services industry has entered the open era. Ecosystems are expanding and new partnerships are being forged, while traditional infrastructures and mindsets are seeking to adapt to new ways of doing business. The Financial Services Forum was a day to discuss where the journey will go, how the pioneers are preparing, and what pitfalls can be avoided. The forum included keynotes delivered by end users, roundtable discussions, vendor-led workshops, panel discussions, and one-to-one networking sessions.

Here are my key takeaways from the event:

Intelligent, Agile, and Automated in the Cloud

Cloud has become a reality for financial institutions in the U.K. and the public announcements of “cloud first” strategies have become a reality, as business demands the agility, flexibility, and speed that only public cloud allows. Banks are seriously considering cloud-first strategies that launch new workloads in the public cloud, where regulation allows, rather than wasting the weeks or months it takes to host them on-premise or in a private cloud. The three takeaways for financial institutions are:

  • The high cost of public cloud – Today’s public cloud pricing models are prohibitive to run most workloads, except for short-term, high-performance workloads. The consensus at the table is that private cloud is a lot more cost efficient than public cloud for the standard consistent low-volume workloads banks run primarily.
  • Banks are focusing on building multicloud capabilities to optimize how and where workloads are hosted in a hybrid model – The ability to shift between providers and cloud models is becoming increasingly important. Banks are also looking for service providers that can help with this optimization.
  • Financial institutions need better control of how cloud is managed – The CIO should ultimately be in control of cloud budgets, to have a centralized view of what is deployed where and avoid shadow IT, to manage and ensure payments continuity, and to lead negotiations with cloud providers and optimize pricing.

Customer Experience Depends on Effective Processes

The future of financial services depends on delivering products and services that are rooted in customer centricity. Ensuring best-in-class customer experience should be the principal priority of financial services institutions. Banks and insurers are slowly getting accustomed to the reality of “engagement on demand” in the digital world. Many are responding to this by introducing roles like “customer experience officer” and investing in new digital technologies. Many organizations are viewing “mobile first” as a solution to improve customer reach and meaningful engagement, but there was consensus among the roundtable participants that mobile is only one part of the solution.

  • One of the key takeaways was that financial services organizations should gear up to deliver consistent experiences across traditional and digital channels and the choice of channel should rest with the customers. This will help them feel more in control of their data and personal financial management.
  • Another takeaway was the importance of a feedback loop in customer experience initiatives. It is necessary to listen to and learn from all interactions and not just grievances to continuously correct and improve ongoing processes.
  • Lastly, banks and insurers that are reluctant to embrace an ecosystem approach and adopt new technologies to address current issues in customer engagement could find it difficult to survive in the digital race.

For more information on IDC Financial Insights’ research on open banking, contact us at insightseurope@idc.com or CLICK HERE to visit our website.

// ]]>