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Financial Services Think Tank: Harnessing the impact of Digital Disruption

On 7 July, KCOM welcomed a host of senior executives from across the UK’s Financial Services sector to London’s City Hall to explore the impact of emerging and existing digital technologies on the future of Finance.

On 7 July, KCOM welcomed a host of senior executives from across the UK’s Financial Services sector to London’s City Hall to explore the impact of emerging and existing digital technologies on the future of Finance.

Jointly hosted by Nimbus Ninety, an independent community for technology leaders, we heard an insight presentation drawing on recent industry benchmarking surveys for Financial Services, before breaking into two roundtable discussion sessions to debate the the opportunities and challenges of digital disruption in today's Financial Services market. 

Organising for digital

Our attendees agreed that first and foremost, an organisation needs to reorganise for digital transformation to truly succeed. Rather than a top-down or even bottom-up approach, there needs to be a consistent digital strategy throughout the organisation possibly backed up by a company-wide mission statement advocating a ‘digital first’ methodology for even greater clarity. Digital ‘siloes’ will never work; cross-functional teams that include specialities such as compliance, security, user-centric designers and analytics specialists need to be prioritised from day one – with a senior sponsor to determine a direction as a necessary foundation for such largescale activity.

In terms of historic legacy investments, any digital transformation programme will first need to rationalise existing infrastructure and processes to ensure a smooth integration with new technologies.

Cultural considerations

Embracing a new way of working can create some resistance and hesitation with both customers and staff if digital transformation is not properly introduced. Our roundtable experts were vocal in supporting the need for education alongside any technological advances – ensuring that customers are aware of and also comfortable with new digital products so they can properly take advantage of new capabilities. The needs of your customer base must be thoroughly evaluated, as different market segments will have preferred communication channels and levels of technical ability. The needs of these different segments are met accordingly – there is no one size fits all solution!

Internally, organisations must be clear before embarking on a digital transformation programme on the necessary deliverables for the project’s success to be evaluated. With new processes and technology, it’s essential to define where the break-even is, but also what the risk of doing nothing is – particularly in a volatile and competitive market.

Although regulatory considerations are often seen as a threat to digital transformation within the Financial Services, our attendees actually felt that regulatory issues can ultimately be a barrier to start-ups that increasingly disrupt other industries. Already having a regulatory and compliance structure in place may ultimately come to be an advantage for Financial Services incumbents in the years to come.

Innovation

For the Financial Services, there’s no question that digital transformation could lead to huge cost efficiencies across the board, with particular potential for cost reductions in traditionally labour-intensive areas such as Insurance. However, our attendees all felt that innovation cannot be driven ahead just for the sake of it. Rather than just making existing products available through a website (a practice several major players have fallen to in years gone by), new capabilities that can only exist because of digital need to be explored. For digitally-minded customers, there is the potential to break away from cost-intensive local branches and move online. But at all times, organisations need to ensure more traditional customers can still access the same level of service they’ve come to expect via traditional channels.

We saw considerable debate around the rise of agile IT, and the continuing popularity of a ‘fail fast’ methodology. Although the Financial Services are often understandably risk adverse, their definition of failure does need to examined in the light of digital transformation – is it really failure if you’ve learned a significant amount in a short time?

Ultimately the consensus among our attendees is that the Financial Services needs to move into a new technology era. It’s no longer enough to be a bank with an IT team – tomorrow’s major players will model themselves as a technology company with a banking license. For organisations that succeed in reorganising for digital, the sky is truly the limit.