The world of finance typically has three choices it can make. Industry leaders can be reactionary to their customers and the market, become quick followers of the latest trends, or become leaders with their embrace of new science, technology, and digital concepts.
Jean Chalopin an entrepreneur said, “If you are not continuously trying to evolve as an organization, then you will fall behind the others who are being more proactive than reactive. By anticipating change, it becomes easier to manage the disruption of convergence.”
Innovation in finance becomes available when institutions enable data, analytics, and technology to guide them in a world with new competitive challenges. Mature institutions must recognize the transformation that is taking place in this sector. It isn’t about the latest app someone can develop.
There is real competition from digital giants who are entering the markets that are traditionally served by the financial services industry.
Being Digital Isn’t the Same as Going Digital
Companies in the finance sector are embracing the concept of a digital transformation more often now than ever before, but adding the latest technology to a suite of services will not stop the disruption of convergence. Traditional financial solutions had the goal of achieving a specific end state.
Today’s digital concepts, when combined with science and technology, create the goal of adaptability so that customers can receive smooth, personalized services whenever they’re needed.
That means the finance industry must shift its point of focus. Instead of being driven by transactions, there must be an emphasis on the data that customers create with each interaction to maximize value in every segment.
A Customer-first Emphasis is Only the Beginning
Unlocking the potential treasure trove of data that the finance sector is sitting on is only the first step in the process of defeating the disruption of convergence. Customers already expect to be the center of each interaction. That is why organizations require more than a clear vision and customized products.
There must be a complete reinvention of the ecosystem. Financial institutions need to take a new look at every component of their existence so that they can find new ways to drive value through innovation.
Acquisitions, partnerships, and automation are three common ways that internal and external reinvention occur, but every situation is different. Science, technology, and digital must come together to anticipate shifting markets, revisit relationships, and develop immersive experiences.
New business processes could include virtual reality, augmented reality, artificial intelligence, and deep learning to create extensive customization. When an immersive innovation cycle combines with a culture that values experimentation, it becomes easier to retain the talent needed to drive future results.
Changes Must Happen Sooner Rather Than Later
Convergence is bringing new players into the traditional finance industry. Emerging tech is changing the landscape permanently. Mature banks and legacy providers who choose to take a narrow focus with a digital transformation will risk losing to the competition because they may not have enough customization to maintain customer loyalty.
Only those who are courageous enough to embrace a new strategy that uses science, tech, and digital concepts together will have the power of innovation to help them keep pressing forward.
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.