• Guy Mettrick, GM, Practice Leader Of Financial Services at Appian


• 18.07.2016 11:49 am

Impact of FinTech on financial services 

Financial services companies have always been able to adapt their business in the face of external pressure. Companies have become successful by offering new products and services demanded by their customers, complying with evolving regulation by enhancing their control and oversight procedures and investing in new systems. The pressure to grow their business and manage their costs, means many firms have used acquisitions to gain economies of scale or enter new markets.

An outcome of all this change has been the proliferation of systems, data and processes within departments necessary to run a large organisation. There is a huge amount of knowledge and capability tied up in these back office silos that is difficult to share with the rest of the organisation in any meaningful way. This creates a disjointed and inefficient journey for anyone trying to navigate their way across that organisation be they customers or staff.

This leads to unhappy clients, lost revenue opportunities, inefficient processes and potential exposure to risk and compliance failures.

Unfortunately these issues also impact the rate an organisation can change. This is a real problem with the rise of FinTech companies and the speed at which they are able to develop, adapt and compete.

It is therefore vital that management within traditional banks respond appropriately to remain competitive, using technology to rapidly transform processes across the whole of their business rather than applying technology within isolated areas.  

The rise of the challenger bank and changing customer expectations

Challenger banks are emerging with a clear advantage over their traditional bank counterparts. Specialty providers, delivering the benefits of simplification, address and solve real business problems and deliver innovative solutions.

These new entrants see opportunity where others see risk, and have evolved to respond to changing consumer expectations. Banking customers now expect greater access, flexibility, price, transparency, and general convenience. These new businesses are taking advantage of digital channels that are difficult for existing market players with their legacy siloed systems.

Traditional banks must now find ways to offer more seamless, fully integrated services, to keep up with customer expectations. Those that have an ability to connect information, people and processes at multiple levels - transformational readiness – will be the successful organisations in the long run. 

Where are we seeing transformations within banking as a result of FinTech?

Retail banking has seen dramatic change as a result of FinTech development. New payment solutions such as Apple Pay, are impacting the way customers pay for goods and services. Traditional banks have to respond in order to remain relevant, Barclays recently rolled out Pingit, their own mobile payments service. Other banks have launched new mobile banking businesses, separate from their legacy operations in order to try and compete in this digital age.

If traditional banks want to bring the rest of their organisation into this age then they need to start placing a digital technology layer across all their legacy systems and siloed databases. This will allow them to effectively utilise all the knowledge and skills that they have available across their organisation in a way that meets their user and client expectations.

This digital age is not confined to retail and commercial banking. Other markets such as Wealth management are undergoing technological transformation as new companies are starting to use artificial intelligence to provide investment advice to the mass affluent and HNWI markets. A number of financial technology companies have introduced robo-adviser services, and this innovation will continue within the wealth management sector.

The path towards transformational readiness

Financial Services will continue to evolve at an increasing pace. New technology is driving change and regulation is also creating opportunities for new technology to prosper.

Much effort has been about improving the way customer interact with their bank, mobile banking apps utilising the native features of Android and IOS to improve the convenience and speed of use.

However, it is only when traditional banks start to tackle their existing infrastructure that they will be able to transform their business. Using technology platforms to deliver new agile applications that integrate with legacy siloed systems, will allow organisations to innovate more rapidly. They will then be able to provide all their customers (not just the millennials) with better products and services and enable their staff to work more effectively together.