Financial services executives are reportedly facing many challenges. These include the struggle to keep up with changes coming at them from all directions.
A new survey published by Deloitte, a company providing audit, assurance, consulting, risk and financial advisory, among other services, examines the challenges and opportunities global finance executives anticipate.
A look into the future
Financial services industry executives are reportedly facing many challenges. These include the struggle to keep up with changes coming at them from all directions: new technologies, new market players, and shifting customer demand.
How rapid is the environment changing for financial services industry (FSI) companies and how are leaders planning to navigate their companies into the future?
Deloitte`s analysis provides some insights into executives`expectation for the future that could possibly answer these questions. In short, survey analysis found that:
- Many G7 leaders doubt the influence of some emerging technologies, and are less likely to include them in their current plans
- There is broad agreement about the influence of regulation, and relatively less concern about both current and emerging competition
- G7 executives see changes in talent and operations coming much sooner than those in the rest of the world
- Talent needs and gaps differ; G7 leaders are looking for industry and content knowledge, whereas others value flexibility and adaptability
Technology is bringing change, but emerging technologies are not leading
As the executives surveyed said, change is coming. However, they disagreed about the degree of change they will likely experience over the next five years. Half of the surveyed executives expressed an opinion that the industry will change radically, while the other 50 percent commented that change will come more gradually. Nevertheless, most respondents said that the root cause of change is technology innovation. In particular, more than two-thirds felt that it would play a role in industry change, whereas nearly one-half believed regulation would have a major influence.
The survey focused on a set of emerging technologies – wearable devices, the Internet of Things (IoT), biometrics, robotic and cognitive automation (R&CA), cryptocurrencies, mobile payments, and blockchain. These technologies have received a lot of press and attention from industry players, according to Deloitte.
As the company pointed out, many financial institutions are now experimenting with, and in some cases implementing, these technologies. Still, the survey showed divergence in opinion about the role that these technologies play in driving change. In particular, some FSI leaders are not convinved that they will have an impact.
“And, given the lack of track record, these leaders are cautious about rolling them out to their clients.“, as Deloitte wrote.
Will slow and steady win the race?
Deloitte lists some insights that come from the survey findings:
Firms outside the G7 see their futures as being much more dependent upon emerging technologies, while many in the world’s largest economies wait for proof of impact. But, in light of the rate of exponential change in technologies, it’s quite possible that this complacency/skepticism among the G7 FSI firm executives might put them at a disadvantage. By that point, they may be too late to capture a leadership position.
- Firm leaders around the world are less likely to be preoccupied with potential fintech disruption moving forward. They do, however, recognize the need for innovation; acquiring talent with nontraditional profiles may be an increasing part of the solution.
- Outside of the United States, where regulatory tightening is expected, firms will likely need to continue to push for improved risk management and compliance protocols.
- G7 financial institutions may seek to increase the pace of business transformation given expectations for rapid change. But they may leave opportunities for improvement on the table if emerging technologies such as robotic and cognitive automation, blockchain, and the IoT are not in the playbook.
The author and executive director of the Center for Financial Services based in Deloitte`s Boston office, Jim Eckenrode, concluded that leaders in both groups can benefit from considering these factors in their strategic planning and investment cycles. Also, they could think how these findings can be applied to their companies and markets, as the report added.
A full overview of the research is available at the following link.