Sponsored: Financial Services: Long live the revolution
A focus on the customer remains key as financial services continues to confront disruption and new innovations, says Nucleus Software EVP and Global Head of Marketing and Strategy Avnish Datt.
What a difference a single letter can make – in this case, the addition of the letter “r” to evolution.
When people think about revolutions, images of fast, often violent changes come to mind. Images of the old order being discarded and replaced with something new. People even talk about revolutionary thinking.
What about evolution? It is much slower, a gradual development of something. People talk about evolution in terms of generations or eons.
The differences, and similarities, between these two concepts are particularly relevant at the moment because many people say we are in the Fourth Industrial Revolution.
Introduced in 2015 by the World Economic Forum, its proponents say that it will fundamentally alter the way we live, work and relate to one another.
It is expected to set the pace of disruption through the emergence of artificial intelligence, machine learning, digital systems, networked communications and large-scale data analysis.
And they say that it will be unlike anything we have experienced before.
Impressive, and, in some ways, scary. It reinforces the idea that revolution is threatening and fast but evolution is slow and not as threatening. But is this really correct?
There is some evidence that Neanderthal man and modern humans (Homo sapiens) co-existed (in Europe at least) for between 2,600 and 5,400 are the Neanderthal’s today?
While their extinction didn’t happen in a revolutionary way – fast and sudden – they are still extinct.
Even in evolutionary times, banks need to have a long-term view of where the world is going and they need to put in place the strategies to deal with that.
The rise of fintech was initially seen as a revolutionary threat to the established position of banks.
It was triggered by advances in technology and the slow pace of innovation in financial services. Put simply, entrepreneurs saw an unmet need and raced to meet it.
But as the initial euphoria subsided, revolutionary aspect has slowly morphed into collaboration and co-existence. The fintechs are seen as specialists offering an alternate approach in redefining certain specific areas of banking, however nowhere near in a position to replace the banks.
The perceived threat did trigger a wave of transformation initiatives across the global banking industry. A number of banks utilized the opportunity to align themselves to the evolving customer expectations – adopting digital channels first, setting up separate ‘digital only’ entities and streamlining internal processes.
However, if we look closely, these changes are nowhere as significant as the ones brought about by similar technology revolutions in other industries.
The impact of digital in photography, robots in manufacturing, mobile in telecommunications and aggregators in personal transport have been far reaching and defining.
The incumbents have had to radically transforms themselves or lose out in the race to dominate. These changes have been truly revolutionary.
Banks have adapted before and thrived. They can adapt again and thrive.
So, does this mean that banks need no longer be worried about the possibility of a revolution in banking that can challenge them?
In the absence of any significant threat to their status quo, can they go back to their own pace of change or evolution? Not really – it is difficult to see (in advance) which evolutions will rapidly turn into revolutions and it would be fool hardy to remain oblivious of any evolution.
As customers become accustomed to personalized, digitized customer experiences, they will continue to expect it from their financial services providers.
There will always be competition from unexpected quarters. The growing acceptance of new platforms offered by Big Tech companies, which provide a seamless experience and also cover selected aspects of financial services, is one such example.
Even in evolutionary times, banks need to have a long-term view of where the world is going, and they need to put in place the strategies to deal with that.
To some degree, customers will decide the future of financial services by choosing from the options available to them but banks need to ensure that they continue to offer a compelling proposition to their customers.
Banks need to anticipate what their customers want and offer it to them in advance as a part of their strategic roadmap.
In many ways, these are just the latest set of challenges presented to banks, challenges which they can either choose to ignore or adapt to.
Banks have adapted before and thrived. They can adapt again and thrive. But to do so, they need to ignore whether this is a revolution or an evolution and instead focus on giving their customers what they want.