- On November 17, 2018
*based on PwC Financial Services Technology 2020 and Beyond
40% of today’s Fortune 500 companies on the S&P 500 will no longer exist in 10 years. This is according to a study from the John M. Olin School of Business at Washington University. To some this sounds scary to others exciting – the more you consider yourself from the latter, the more likely you are to succeed riding the future waves.
So make sure you work for companies that are disrupting the status quo and are seeing well beyond the horizon. And if you are in one way or another responsible for the direction your company is heading at make sure you thick the points below to make it future-proof.
Especially challenging in this adaptation to change game will be the role of the IT executives. According to PwC they will need to agree with the rest of the management team on the posture they wish to adopt. The main decision managing boards will have to make is whether they will try to be industry leaders, fast followers, or will they just react. A clear forward moving strategy will be necessary whichever the choice. But let’s not forget people are resistant to change – hence the failure of most companies to adapt (continues below).
- The first area of business future-proofing according to PwC is to update your IT operating model to get ready for the new normal. The entire IT stack will be affected by the new offerings to customers. You may need different hardware, software, or storage technology and even a new way to network the components. And this (consider yourself warned) is going to be just the start. Because business-as-usual is no longer usual, IT operations will have to adjust to the new way information lows run and are being processed. Financial institutions will need to manage the flows and processes that occur within your facilities as well as across domains. In terms of human resources – IT will require specialists with expertise in everything from data analytics, robotics, and user-experience design to cyber-security and integration.
- The ability to slash costs by simplifying legacy systems, taking SaaS beyond the cloud, and adopting robotics/AI is the second priority according to analysts. The winners will manage to break the vicious cycle of increased operating costs. To stay competitive financial companies will have to selectively decommission legacy systems and integration infrastructure and this is one of the major savings opportunities. The concept of service-oriented architecture is another and it can be used more broadly than ever. PwC analysts encourage companies to think big by setting expectations for a systems design that allows IT to plug anything into anything! One of the major breakthroughs is that cloud-based platforms will allow financial institutions to bring innovations to market quickly and furthermore test and adapt as they go. The adoption of AI and robotics is also a matter of when not if. And much sooner than we all expect they will replace the humans currently paid to perform a great number of activities. So if you have been wondering where cost reductions can come from – it is exactly through these developments.
- The thirds focus in the future should be to get more intelligent about your customers’ needs and let’s be clear about it to achieve that you need to build the necessary technology capabilities. Not only customer intelligence but the ability to act on that intelligence immediately will be game changer for those who master it. Hence it is no surprise that more than 75% of the banks worldwide are investing to develop a more client centric model. The power of analytics is actually to give the customer more. And here comes the powerful combination of data analytics and AI – when used properly it can help financial institutions understand their customers more than ever before.
- To keep costs at a competitive minimum and to be flexible enough to respond to innovation requirements, financial institutions will have to commit to a new infrastructure which is more agile and responsive. This is a necessity in order to connect to anything, anywhere. That is why we at c-wise get more and more inquiries to build an architecture that is responsive to the change of requirements change and that can interact with data and systems that could be anywhere.
- The fifth change-or-die factor by all means is cyber-security. Technology risks and information security are a key focus for the financial industry for decades. Statistics show that traditional approach to security is not sufficient and incidents are growing rapidly each year. Becoming a management priority, cyber-security will have to be integrated in the business risk process and the executives should be kept accountable for decisions they make in this direction.
- But let’s face it – none of the above is achievable without access to the talent and skills necessary to execute and win. That is why analysts advice to carefully assess the talent gap – what the company has today versus what it needs to get into the future. Then it has to adopt an entirely new approach to talents management to acquire and sustain that valuable resource.
According to the PwC report each of the above priorities is important so none can be easily skipped.
The take-away of this highly recommended reading that we summarize for your convenience (see infographic) is that each of these priorities is achievable! And we at c-wise work on that with our clients for years now and have seen best results by combining short term actions with strategic long term vision. Easier said than done, we know, but this is the winning combination that will allow financial services firms to prosper in 2020 and beyond.