Should the funds industry look for inspiration outside of Financial Services?
Of all the industries to navigate disruption, gaming has perhaps been one of the most successful. At the forefront of the digital revolution, the gaming industry has not only adapted to harness burgeoning technologies but has driven their development.
Quick to evolve as more users started playing games online, the sector is also leading the way in terms of co-creation, developing products and shaping experiences in conjunction with its own customers. Such co-creation has allowed the gaming world to design highly personalised products for users.
If the financial services industry is to thrive, it could do well from taking inspiration from how sectors like gaming are evolving their offering to meet the ever-changing needs of their customers.
This mindset of innovation is not unique to any particular industry. For instance, advancements being made in the field of bionics are completely revolutionising medical sciences while manufacturing is undergoing unprecedented change as a result of innovations in 3D printing techniques.
One of the world’s oldest industries is embracing change
Even enterprises not renowned for being at the pinnacle of cutting-edge technology are making waves. Take the New Zealand meat and dairy industry, for example. I was intrigued to learn that a company called Halter has developed solar powered cow collars, which use artificial intelligence and audio signals to shift and manage livestock. Innovation in this sector is essential if the industry is to successfully navigate the inevitable disruption that will be experienced with changing consumer demands and substitute meat and dairy products becoming more readily available.
Whether we are talking gaming, manufacturing or agriculture, one constant remains; these innovations have ultimately been brought into life and made possible by organisations and individuals who were unwilling to accept the status quo. Who actively pursue new ideas to ensure the longevity of their business and in pursuit of a better tomorrow.
Disrupt yourself or be disrupted
Over the years, countless industries and businesses have been disintermediated as better, more robust and cheaper solutions become readily available to ordinary consumers. However, the financial services industry has long been resilient to disruption owing to the fact that it is heavily regulated and continues to be dominated by a handful of incumbents.
As banks and asset managers are the guardians of our capital, trust is of the essence. As a result, innovation at financial institutions is closely scrutinised, an unintended by-product of which is that new and exciting ideas at these organisations frequently get jettisoned or delayed. This absence of progress often means that existing providers are saddled with legacy products, technologies and infrastructure, allowing for inefficiencies to proliferate.
In the context of the innovations underway elsewhere, for financial institutions to avoid disruption they should avoid any complacency at all costs. The rapid emergence of fin-techs, reg-techs and new market participants has the potential to pose an existential challenge for the old order. Many of these new entrants put technology at the heart of what they do, ensuring that their products are user-friendly and deliver value for money to the end consumer. Moreover, their services are data-led allowing them to develop bespoke solutions for their customers.
Big tech cannot be avoided
I am witnessing the beginning of this power-shift dynamic already. Many fin-techs are already encroaching on a number of conventional banking activities such as asset servicing and custody. Furthermore, some of the brand-name technology giants (e.g. Amazon, Alibaba) are starting to diversify into areas of financial services long controlled by traditional financial institutions such as global payments; loan issuances and even fund distribution.
If providers of financial services are to flourish moving forward, they will need to navigate and embrace disruption in equal measure. I believe this will require organisations to develop a culture that prides itself on innovation, but which also does not lose focus of its core business. Simultaneously, companies will need to constantly challenge themselves – if they are to successfully stay ahead of the curve and ensure their businesses are future proofed.
Dream, try, fail fast, repeat…
Concepts like ‘innovation’, ‘change’ and ‘transformation’ can be daunting for some – but in my opinion – this need not be the case, especially as the pursuit of such objectives will be pivotal in helping firms strengthen their businesses and adapt to evolving market and consumer trends.
What do you think? Respond to this blog and let me know how you think the funds industry can adopt new technologies or find simple new ways of working.
My focus is on the future of our industry. We can make a difference now. But, we need to find new ways of looking at old problems using existing technologies, better use of data and applying new technology in the right way.