Many industries have experienced disruption through technology. Hotels by AirBnB. Taxis by Uber. Retail shops by Amazon. The financial industry also faces a host of disrupters that may completely transform the sector.
- Blockchain technology. Blockchain tech will disrupt finance, but may also disrupt legal institutions, artists and musicians, real estate, employment, and social networks, to name only a few. To put it simply, blockchains are value exchange protocols that build a stable and unchanging transaction record. This technology removes the expense and complication of financial transactions, as well as all the middlemen from value transactions. This will allow payments between people that don't involve banks, investment firms, or credit card companies. You can read more details here and here.
- Obsolescence. To be obsolete means to be no longer useful or valuable. Multitudes of startups are attacking how the finance industry operates. If the legacy systems in the industry don't respond, these new businesses may take over a significant portion of the market.
- Consumer expectations. A study from the fall of 2015 shows that 62% of retail bank execs believe they provide excellent customer service, but only 35% of their customers agree with them. Banks need loyal customers to survive. Failing to meet consumer service expectations puts that survival at risk.
- Regulatory requirements. This report from Deloitte provides an in-depth look at regulatory trends impacting banking services. The report states, "Regulatory supervision, often through oversight from multiple regulators, has moved beyond the planning phase and is now focused on tools and implementation supported by strong ethics, culture, and related accountabilities at every level of the organization."
- Security concerns. When it comes to cyberattacks, financial institutions are common targets that prove lucrative for hackers. Even the Federal Reserve isn't immune.
- Data storage, protection, and management. Part of regulatory requirements include restrictions and safeguards for how data is stored, managed, and protected. Computer Weekly in this article and podcast describes the top 5 challenges for compliance with data storage and backups.
- Rise of fintech. Fintech is shorthand for financial technology. Many new businesses have discovered how to circumvent the hassles of financial services. They have done this by becoming simpler, easier, and faster than the old stand-bys.
As a financial services firm, are you prepared for the technology disrupters that are coming? Magenium can help you figure out the best path forward for your business. Please contact us or call +1 (630) 786-5900.