Industry Trends
Over the past year, there has been a significant focus within the Financial Services (FS) industry on conservative, organic growth while managing risk and regulatory expectations. Over the past 18 months, the financial services industry has been experiencing a shift. The rapid adoption of Fintech and increased pressure on cost reduction has created an opportunity for leading practice financial service organizations (FSOs) to adopt an information-led strategy, using Digital, Data and AI (collectively referred to as Digital) to achieve rapid growth and market share. As established organizations, it is imperative that this progress includes a tight alliance with the finance, risk, and compliance organizations.
The Challenge
The Opportunity
Leading Practices
The established financial services organizations (FSOs) are the latest to be set up for examining the integration of digital, data, and analytics into all facets of its business model. Some recent challenges continuing to drive the industry’s change include:
To meet these challenges through the utilization of Digital opportunities, proactive financial services organizations (FSOs) tend to address their market proactively through:
In implementing Digital transformation, leading-practice financial services organizations (FSOs) differentiate themselves through:
Developing and Implementing Strategy
The industry faces the challenge of adapting to changing customer needs, regulatory environments, and competitive pressures, and aligning their business models, products, and services accordingly.
Leveraging AI and Data for Growth
The industry has the opportunity to use artificial intelligence and data analytics to enhance customer experience, optimize processes, improve decision making, and generate new revenue streams.
Combatting Cyber and Financial Crime
The industry is exposed to various forms of cyber and financial crime, such as fraud, money laundering, identity theft, and ransomware, and needs to invest in robust security systems, compliance frameworks, and incident response plans.
Controlling Financial and Credit Risks
The industry is subject to various financial and credit risks, such as market volatility, interest rate fluctuations, credit defaults, and liquidity shortages, and needs to manage them effectively through risk assessment, mitigation, and diversification.
Managing Operational and Technology Risks
The industry relies on complex and interconnected operational and technology systems, which pose the risk of disruptions, failures, errors, and inefficiencies, and need to be monitored, maintained, and upgraded regularly.
Data to Support Insight-Driven Business
Innovating and developing predictive analytics capabilities through AI, utilizing the wealth of data available to existing organizations.
Shift the Role the FSO Provides
Broviding more value to customers and becoming a go-to resource for how they live, rather than being a pure financial utility.
Reinvent Loyalty Programs
Real-time, personalized interactions, integrating digital platforms to capture customers' actual intent through triggers such as social interaction and transaction indicators.
Customer Service as a Part of the FSO's Genetic Code
Business strategy to the day-to-day culture, service must be consistent and continually refined based on customer feedback.
Cross-Channel Experience
Known as "phygital", customers want seamless experiences that blend physical and digital, and few FSOs are meeting their demands. Minimizing channel conflict will help the FSO stand out.
Shared Digital Vision
Development of a shared Digital vision amongst executives from the front line to the top of the house. This Digital vision is based on a strategic plan that includes collaboration across product lines, through all lines of risk, and ecosystem collaboration through B2B and B2B2C partnerships.
Common Coordination of Investment
Coordination of Digital investments throughout the organization and sharing these investments within operations, new product development, and pricing.
Near-term Results
Implementation of Digital pilot initiatives, focusing on near-term results, while ensuring that these include a broader roadmap for organization advancement.
Ecosystem/Platform Business Model
In implementing a Digital strategy, consider an ecosystem approach and/or the use of an Open Banking platform, including APIs to support and encourage the development of industry partnerships with Fintech and Regtech players.
Over the past year, there has been a significant focus within the Financial Services (FS) industry on conservative, organic growth while managing risk and regulatory expectations. Over the past 18 months, the financial services industry has been experiencing a shift. The rapid adoption of Fintech and increased pressure on cost reduction has created an opportunity for leading practice FS firms to adopt an information-led strategy, using Digital, Data and AI (collectively referred to as Digital) to achieve rapid growth and market share. As established organizations, it is imperative that this progress includes a tight alliance with the finance, risk, and compliance organizations.
The Challenge
The established firms within financial services are the latest to be set up for examining the integration of digital, data, and analytics into all facets of its business model. Some recent challenges continuing to drive the industry’s change include:
Developing and Implementing Strategy
The industry faces the challenge of adapting to changing customer needs, regulatory environments, and competitive pressures, and aligning their business models, products, and services accordingly.
Leveraging AI and Data for Growth
The industry has the opportunity to use artificial intelligence and data analytics to enhance customer experience, optimize processes, improve decision making, and generate new revenue streams.
Combatting Cyber and Financial Crime
The industry is exposed to various forms of cyber and financial crime, such as fraud, money laundering, identity theft, and ransomware, and needs to invest in robust security systems, compliance frameworks, and incident response plans.
Controlling Financial and Credit Risks
The industry is subject to various financial and credit risks, such as market volatility, interest rate fluctuations, credit defaults, and liquidity shortages, and needs to manage them effectively through risk assessment, mitigation, and diversification.
Managing Operational and Technology Risks
The industry relies on complex and interconnected operational and technology systems, which pose the risk of disruptions, failures, errors, and inefficiencies, and need to be monitored, maintained, and upgraded regularly.
The Opportunity
To meet these challenges through the utilization of Digital opportunities, proactive financial services organizations tend to address their market proactively through:
Data to Support Insight-Driven Banking
Innovation, and develop predictive analytics capabilities, utilizing the wealth of data available to existing institutions.
Shift the Role the Bank Provides
To provide more value to customers by becoming a go-to resource for how they live, rather than being a pure financial utility.
Reinvent Loyalty Programs
With real-time, personalized interactions, integrating digital platforms to capture customers' actual intent through triggers such as social interaction and transaction indicators.
Customer Service Must Become Part of the Bank's Genetic Code
From the business strategy to the day-to-day culture. Service must be consistent and continually refined based on customer feedback.
Cross-Channel Experience
Such as "phygital". Customers want seamless experiences that blend physical and digital, and few banks are meeting their demands. Minimizing channel conflict will help banks stand out.
Leading Practices
In implementing Digital transformation, leading-practice organizations have been differentiating themselves through:
1) Shared Digital Vision
Development of a shared Digital vision amongst executives from the front line to the top of the house. This Digital vision is based on a strategic plan that includes collaboration across product lines, through all lines of risk, and ecosystem collaboration through B2B and B2B2C partnerships.
2) Common Coordination of Investment
Coordination of Digital investments throughout the organization and sharing these investments within operations, new product development, and pricing.
3) Near-term Results
Implementation of Digital pilot initiatives, focusing on near-term results, while ensuring that these include a broader roadmap for organization advancement.
4) Ecosystem/Platform Business Model
In implementing a Digital strategy, consider an ecosystem approach and/or the use of an Open Banking platform, including APIs to support and encourage the development of industry partnerships with Fintech and Regtech players.
MCG's team possess deep industry expertise, enabling us to craft actionable strategies, implement them effectively, and achieve tangible results.