The time is tough and the whole world is coming together to fight the COVID-19 challenge. Some of the brave souls are fighting the enemy at the front lines (hospitals) and most of us are confined to a new reality- working from home. We all need to do our bit and support the fight in whichever way we can. I work in the IT industry and have seen closely how our team members are supporting the critical services such as health care and financial services in the trying time by working from home.
While we never anticipated that the new decade will start like this, I thought of sharing my views on the financial services in the new decade and how we have seen the business shaping up. It is extremely difficult to predict where we will land after this crisis is over but in the course of next few weeks I would like to converse about what trends we see in client conversations, how we have overcome challenges in the past and what can we expect going forward.
During our conversations with financial services clients in Nordics, the undercurrent is mostly around the threat from the new digital players-
- Will they be a threat next year or in the next 5 years?
- Are they a big enough threat or just trendy organizations which will be gobbled up by major established players?
- Do we go with the acquisition, build our own capabilities, or employ the ecosystem strategy?
- Reduce costs or modernize?
- Are the big FS (financial services) players agile enough to respond to a threat landscape which is changing rapidly- around competition, regulatory environment, and security?
There are no straightforward answers to these questions. We have seen successful examples of FS clients who have used digitalization as an opportunity for cost savings through automation, cloud solutions, and
While Nordics is a market with its own intricacies and each player has its own peculiarities, I’m listing some of the trends we are seeing in the Nodics FS area (some are global trends impacting FS in Nordics):
Trend 1: Agile- Most of the organizations are embracing agile work. Of course clients are at varied stages of maturity. Some are starting out and some are already quite ahead in agile work. This changes a lot as now partners and clients are in the same team. Some of the queries we hear often include:
- How do we work with SLAs/ KPIs?
- What happens to contracts, would agile work for legacy?
Trend 2: Security- The threat landscape is rapidly changing and clients are under tremendous pressure to evolve in real-time and protect their clients. This could become a huge reputation risk and wipe off the valuations in an instant. Some of the queries we hear often include:
- How do we secure the systems with multiple stakeholders?
- How do we keep abreast with changing threat modus operandi?
- How do we secure our systems from internal threats?
Trend 3: Compliance- The complexity surrounding regulatory compliance is increasing with each passing year and this has been captured a lot of IT budgets and bandwidth with the looming threat of huge penalties. We see this as a priority item that warrants board level discussion.
Trend 4: Automation- This has been the favorite word for business having a two-fold effect of taking out costs and shifting resources from redundant tasks to significant engagements. There are no silver bullets and everything can't be automated but wisely used automation could be an effective strategy.
Trend 5: Data is the New Oil- Analytics boosted by real-time processing, dynamic integration of new data sources, and artificial intelligence has been a major differentiator. Organizations are using data to serve clients better and profitably.
Trend 6: Growing Interest in Cloud- The interest has moved from theoretical exercises to actual implementations (although limited) and organizations have been trying to balance regulatory compliance with the possibilities cloud has to offer. Some of the queries we hear often include:
- What is the adaptability of cloud to the regulatory environment?
- How could FS organizations use more and more cloud within the limits?
Trend 7: Superior Customer Experiences- In essence all the above threads serve as a means to this end. The expectations of today's customers from the banks and insurers are molded by the experiences they receive from Google, Apple, and Facebook. Anything short of a good overall experience served on your online portal or application can be the difference between retention and attrition. This coupled with the challenge of fintechs is one of the biggest disruption affecting the financial services industry.
Trend 8: Streamlining IT Spend- This has been a constant theme over the years and will be ever more relevant in the wake of the ongoing crisis, with clients optimizing precious funds with outsourcing, near-shoring, offshoring, captive offloading, decommissioning, and landscape modernization. I expect this trend to be one of the main discussion points during coming months.
I will talk about these trends in detail in the subsequent posts.
Feel free to reach out to me to discuss how digitalization could be used as an opportunity to optimize costs and provide superior customer experiences here or over a remote session (this is going to be the new normal). Stay healthy and safe!