Money Matters: Digital Transformation in the Financial Services Sector
How can new technology help financial services businesses adapt and grow? We investigate.
Following our recent post about digital transformation in banking, here we’re casting our focus on digital transformation in the broader financial services sector to establish the opportunities it presents, and the trends likely to impact it.
First, however, it’s important to ask:
How do you define a financial services business?
While the article mentioned above focused on banking, fintech and public-facing investment apps, there are several other types of businesses in this sector we’ve yet to explore. They include:
- Investment banking
- Investment and fund management
- Life assurance and pensions
- Capital restructuring
- and regulated advice
As you can see, the ‘financial services’ umbrella encompasses a wealth of sectors in and of itself, each with its own challenges and potential digital solutions. And within that, the term also includes some banking businesses we didn’t cover in our previous post.
Therefore, answering the question we posed at the outset means looking at the technology trends affecting digital transformation change in finance and giving examples of how some businesses have made use of them.
Trends affecting digital transformation in banking and financial services
Improved computer power and ubiquitous connectivity
The first trend massively driving digital transformation in finance is the increase in computing power and connectivity. The rise of Cloud computing and 5G networks will touch every sector area, allowing businesses that move with the times to work from anywhere and offer services to customers who demand access at any time of day, on any device.
Big data is exactly what it says it is – information with much more complexity than companies have ever had access to before. This presents financial service businesses with a chance to glean more about their customers than ever, monitor that information in real-time, and adapt their business practices accordingly. For example, accountancy firms can use this for digitised audits; investment banks can use it to improve risk management; insurers can use it to underwrite claims accurately.
Artificial Intelligence (AI)
With so much data now available, people need machine help to interpret it all and make use of it. That’s why AI will be another of the top trends driving digital transformation in broader financial services. For example, AI can help optimise asset managed portfolios while deepening trader risk profiling, assist in fraud detection and improve financial services’ customer service experiences through AI-powered chatbots.
The Internet of Things (IoT)
The IoT describes web-enabled devices that allow for (potentially big) data to be captured before being analysed by AI. One of the standout examples of digital transformation changes in finance when it comes to IoT is the use of telematics in vehicles by insurers to help give fleets and individual drivers alike more accurate premiums based on real-life driving behaviour. However, IoT can also revolutionise marketing and communications across the board for every business in financial services. For example, wearables, mobile phones, and other devices can allow for bespoke app development, gathering customer data, and marketing exclusive offers and promotions.
These innovations point to a need for processes to become streamlined while simultaneously becoming more secure than ever before. Enter Blockchain – a decentralised Cloud-based technology that records transactions across computers within a network and can be used to make transactions securely. Fund management companies can use it for automated fund launches. Insurers can use it to automate claims. Capital management firms can use it to reduce costs and lower settlement times, while further limiting fraud and human error instances. With so many uses, Blockchain will be a key factor in the digital transformation of financial services in the coming months and years.
Examples of digital transformation in the financial services sector
At One Beyond, we have a wealth of experience working with financial institutions to revolutionise their businesses through digital tools.
Two prominent examples include:
A real-time online roadshow platform built for Black&Callow
Black&Callow creates and distributes documentation for investment banks. They realised there was significant demand for online IPO-related, roadshow-style presentations and research documents to attract investors. However, they found that no single out-of-the-box platform offered the spread of accessibility for large numbers of investors, along with a high level of usability, interactive features, and smart device support.
We built them a digital solution that encompassed all of those features. By partnering with us for the long-term, Black&Callow could add additional functionality as investors suggested it.
A real-time reporting page built for Thornbridge
A fast-growing provider of regulatory hosting and fund monitoring services, London-based Thornbridge wanted to do away with slow and outdated manual methods of preparing fund information and, instead, manage its regulatory obligations in real-time using a new digital platform.
The solution we created gave them that, and streamlined how they communicate with their appointed representatives (ARs), meaning the platform also becomes an internal communications tool. That makes this particular project an excellent example of digital transformation in the broader financial services.