June 7, 2016 by Canadian Underwriter
Chief information officers (CIOs) and other executives in financial services must be able to identify the imminent threats and opportunities that will be affecting their operating model, human capital approach, ability to innovate and ability to execute, notes a new report from PricewaterhouseCoopers (PwC).
Facing unprecedented disruption, it is vital that CIOs and executives are able to quickly innovate when technologies, competitors and markets change, as well as have the skilled resources to do so, PwC notes in a statement Monday announcing the release of Financial Services Technology 2020 and Beyond: Embracing disruption. The report offers details on real-world implications of the 10 technological advances on the industry.
The report includes the following observations with regard to what PwC sees as the 10 most important technology-driven forces that will shape competition in the financial services industry by 2020:
“The public cloud is already safe and reliable enough to outcompete on-premises solutions. Soon, Blockchain may prove to have the same impact on the future of banking as the Internet had on physical stores,” suggests Julien Courbe, PwC’s global FS technology leader.
“You get the feeling that it’s only a little while before banking operations centres are staffed by sophisticated robots, taking over manual tasks from human tellers,” Courbe notes in the statement.
In PwC’s latest global CEO survey, released in January, across all sectors, business leaders reported that the speed of technological change is one of their biggest concerns. In financial services, 70% of the leaders polled noted that the speed of change in technology was a concern.
The report recommends, among other things, updating IT operating models to get ready for the “new normal”; slashing costs by simplifying legacy systems, taking SaaS beyond the cloud and adopting robotics/AI; building the technology capabilities to get more intelligence about customers’ needs; and investing in cyber security.
Combining tactical short-term actions with long-term initiatives that tie to a larger, strategic vision “is how financial services firms will succeed in 2020 and beyond,” the report states.
“Financial services providers may feel that they have already seen this movie,” Courbe says, adding that priorities like updating IT operating models and simplifying legacy systems have always been a good idea.
That said, “what worked for the client server world won’t work for cloud. What worked to secure card-not-present transactions will not work with the Internet of Things,” he says. “Financial institutions need to start thinking quickly about refreshing their strategy for 2020 and beyond,” he adds.
“It is now becoming obvious that the accelerating pace of technological change is the most creative force – and also the most destructive – in the financial services ecosystem today,” states the report.
“Today, we tend to think of financial institutions as the entities that initiate and manage transactions from end to end, typically putting their own capital at risk. Increasingly, financial institutions may play either an intermediary role, with less at stake, or just be one node in a network,” it notes.
“To succeed in this rapidly changing landscape, IT executives will need to agree with the rest of the management team on the posture they wish to adopt. Will they try to be industry leaders, fast followers, or will they just react? Whichever direction they choose, they will need to devise a clear strategy to move forward.”