Where once global economic growth was dictated by labour, the wake of the digital revolution has cemented technology as perhaps the single-most important factor today in spurring social and economic growth. Technology has come to form a considerable – and so often essential – part of our everyday lives, and whether it be communication, travel or healthcare, has served to reconfigure the fundamental grounds on which individuals, businesses and even economies rely.
Technology now constitutes a critical component of every major industry across the globe, not least in financial services, where it has come to play a part in just about every department, from banking and security, to outsourcing and CRM. What’s more, as the sector enters into a post-crisis era, participating firms need now necessarily protect against the missteps that ultimately led to their downfall, and later served to breed mistrust among the masses.
Put simply, the financial services sector is only now emerging from what many believe to be a dark spell, and is beginning to take on a new responsible shape, instrumented in large part by the benefits that come with technological change. One of the most newsworthy developments in technology of late is that with regards to security and privacy.
Technology today has now become so deeply intertwined with our day-to-day lives that our online activities in many instances leave an identifiable footprint, which can in turn be converted by businesses to gain valuable market share. Although big data has been much discussed by those in financial services for some time now, the phenomenon has only recently come to be seen as one of the central pillars on which success in the industry depends.
Implementing big changes
Consumer behaviour is something that companies across the globe are at pains to unearth, and with the advent of big data management has come an incredibly effective means of doing so. With the phenomenon, however, has come a raft of additional regulatory and security measures that have to challenge firms now more so than ever before, whether it is logistically or financially.
Though big data can at times seem an unwieldy resource to manage, an emboldened understanding of consumer behaviour is undeniably important to an industry seeking to rid of its irresponsible reputation and boost client centricity. One of the biggest facets of financial management to have transformed of late is that with regards to fraud detection and prevention.
Where once anomalies would exist and go altogether unchecked by those in charge, big data analysis allows firms to keep a close eye on the smallest and most complex of details in a much more manageable way. Therefore, with greater oversight comes greater accountability, and so, more trust from those who might otherwise remain disillusioned customers.
Whereas previously the vast majority of financial firms offered a standard portfolio of products and services, advances in big data mean that today bespoke offerings are making their way into the mainstream more so than ever before. Owing to emboldened data management capabilities, financial firms can accurately identify and target a very specific group of consumers based on a data-driven analysis of the market.
Another big data-driven development – though one that is less widely practised – is that concerning predictive analytics technologies. Although the technology is little understood, and something very few companies have the infrastructure and specialist skills to support, it is a phenomenon that looks to gather momentum in the years ahead.
The ease by which customers can switch banks today alongside the increased element of competition brought about by the crash demands that financial firms improve upon their client specific products and services if they are to thrive. In order to not only attract but retain customers today, those in financial services must utilise technology in whatever way they can to make products and services at once specialised, efficient and accessible. This personalisation of products and services is one of the biggest paradigm shifts of recent years, and has been made possible to design and implement due to technological gains.
Smaller players on the frontline
Another buzzword to have accompanied rapid technological innovation of late is efficiency, which has prompted all manner of companies to clamour on board the bandwagon, and invest more in technology than ever before. As a consequence, companies in financial services are investing considerably greater resources in IT, knowing it to be the department that could well serve to set them apart from their closest competitors.
Technological improvements have even made it viable for much smaller, technologically savvy companies to re-engineer basic financial services and compete on an equal footing to those with considerably more staff. In the years ahead, expect a greater number of lesser-known firms to rise up rapidly through the ranks over the coming years as the barriers to setting up are reduced predominantly to technological ones.
Another state-of-affairs that is growing increasingly common is outsourcing, which is driven further in the IT sector. With IT requirements becoming far more complex, many companies are finding it much easier to quite simply leave the work in the hands of experienced third parties.
What’s more, setting up sophisticated IT infrastructure is incredibly costly, and in the case of most SME’s entirely unfeasible, which means that in-house IT departments in financial services are often the preserve of larger, global firms. As is the case with various industries apart from financial services, non-core processes are being outsourced to far more experienced and cost-effective third parties in an effort to cut unnecessary costs and boost efficiencies.
Perhaps the most decisive development of the past half-decade with respect to the global economy is that of emerging market growth, and the financial services industry as a whole has done its utmost to capitalise on the many opportunities that have become clear. With the rise of the smartphone has come a whole new market for financial firms to tap, with a market that depends not on a conventional branch network but a reliable, though no less extensive mobile or online alternative.
Although online and mobile banking has existed for some time now, many of the opportunities to be had in emerging markets are still for the taking, as global players come to these new locations as newcomers and attempt to win over valuable market share. Put simply, the principal benefit of improved internet and mobile banking is for accessibility. Where once the banking population in so many developing nations was meagre in population percentage terms, the rate has exploded as the industry has departed from bricks and mortar and migrated instead to the net.
Elsewhere in developed markets, internet banking is nothing short of a mainstay of any respectable financial firm, with companies battling instead to ensure their online solutions are made as convenient, secure and customisable as possible. Not excluded to simple banking products and services, however, online offerings today extend to various fields, interactive investment portfolios among them, as technology continues to reshape the very nature of the financial services industry.
Far from contained to banking, technological improvements have given rise to entirely new business propositions, including being peer-to-peer lending and crowdsourcing, which together look to redefine the financial landscape in itself.
To celebrate the most notable technological achievements of these past 12 months, World Finance pays tribute to the firms we feel have spearheaded the most impressive advances in financial services. Whether it be with regards to back office solutions, banking systems, outsourcing or network infrastructure, the World Finance Technology Awards 2014 offer an insight into those we believe to be leading path-breaking technological gains.
