The Brave New World of Financial Services
The financial services and retail industries are being disrupted from all sides, with new contenders on the market, non-traditional players competing for wallet share, and ever-increasing regulatory constraints.
Consumers are demanding something new from their service providers – they want context, they want targeted experiences, they want assurance, and they want to feel like their money and their data is, above all else, secure. As a result, many firms are exploring different technical solutions to help drive innovation, but there is, as of yet, little consensus about the hype versus reality of these emerging technologies.
Hype versus reality was practically the theme of this year’s Money 20/20, a global conference for those in the payments, fintech and financial services industry. Billed as the place where “leaders, innovators, and disruptors unite to drive change and revolutionize the future of money,” more than 11,000 attendees gathered in Las Vegas last month for standing room only, jam-packed sessions brimming with thought-provoking debate over everything from blockchain and cybercurrencies to artificial intelligence and robotics.
The conference reflected the diverse viewpoints of attendees and was the ideal platform to foster debate among participants. Tracks were built to deliver against the conflict with almost every session asking provocative questions designed to help attendees define their individual approach to the “disruption” of emerging technology.
It’s almost as if the entire event was designed to spur the industry into action — and perhaps it was.
In a session on automation in financial services, palpable hope mixed with healthy skepticism. Bankers’ black suits and brash confidence had been traded in for curiosity, confusion and comfortable sneakers. Egos were down, minds were open and people were ready to learn.
In one session, FinTechs were heralded as the only way to enhance innovative partnerships, while in another, TechFin (the affectionate term for hyper-scalers, managed service providers, and independent software vendors with focused FinServ vertical strategies) was described as the definitive answer to all the industries’ IT needs.
Engagement didn’t stop after sessions. Attendees could be found at noon each day passionately discussing the apparent disconnects over lunch on a huge exposition floor filled with providers showcasing innovations in payments, RegTech, AI and Tech Services.
The experts presenting at the conference weren’t any more unified than attendees. In one session, HSBC proudly displayed its new robotic banking assistant, Pepper, which it claimed would change the face of banking, while in another, AI in general was called an overhyped and overspent innovation with no real ROI.
That’s right, even AI, considered by many an integral part of the future of customer care, was up for debate. Is AI an essential component of the next-generation customer experience? Do customers want robotic virtual assistants or have chat bots, phone decision trees, and data breaches scared them back into the personal touch of branches and stores? Is there a generational difference in these expectations or has the world evolved to expect more from providers?
Champions argued that understanding data is the bailiwick of extended processors and complex algorithms, and without their insight, consumers will never be understood. Detractors emphasized the need for human connection and insist that only AI-enabled decisioning delivered with a personal touch will ever succeed.
Blockchain and cryptocurrencies
Blockchain, a distributed ledger technology, and cryptocurrencies, the tokens based on that technology, were yet another hot topic, both lauded as the next generation of all payments, then dismissed as a solution in search of a problem.
For example, is bitcoin going to break the bank?
Possibly. The need for transparent, multi-national trade is required to break down silos and enable fair global commerce. Still, others argue that the lack of regulatory capability and scaled processing stop blockchain in its tracks. The debate ended in a stalemate.
Unbundling financial services
Financial services, tools and technologies à la carte is the offering of the day – or is it?
Attendees heard that customers prefer to trust a single provider for all their needs, but also that they will they forgo such allegiances and trust Amazon or Alipay, when opportunity arises. Also debated: is it better to build new capabilities and compete with FinTechs and non-traditional providers, or partner up and take advantage of their innovations to drive new, unified consumer experiences?
Leaving the conference, I could sense the introspection coming from all sides. each person left with the question of how they will drive their company’s response – engage or fall back, innovate and build, or partner and share? Automate old process or divest and move on?
The only certainty appears to be that complacency will not suffice for any of us; businesses need clarity of vision and must commit to the path that will best lead them to continued growth, innovation and security. As your business ponders how to create innovative and inspiring new services, engage customers in new ways and identify which technologies can help do that, remember, you don’t have to go it alone.
Rackspace offers unbiased expertise based on nearly two decades of experience. No matter where you are in your digital transformation journey, we can help, from building out a strategy, to execution, with the right technologies at the right time.
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Julio 14th, 2022