DIGITAL DISRUPTION IN FINANCIAL SERVICES

In the digital disruption era, rapid change is the new normal. The Indian Financial Services Ecosystem is no different. The advent of mobile, cloud, big data, analytics and much else is only accelerating the process, which is further compounded by technologies like Blockchain, Artificial Intelligence, Anti-money laundering, 3D printing, robotics and more. While India’s financial sector has taken significant strides in digital adoption, the state of readiness is far from ideal. To brainstorm the challenges and the way forward for the industry, many discussions keep taking place to make people more concerned for the same.
Banking and financial services are becoming more technology led and this helps the service industry to deliver better customer service and solutions. The BFSI segment is on the cusp of disruption because the entry barriers which existed earlier have been removed to a large extent by technology and digital disruption. This point laid focus on trends and challenges of digital disruption in the sector, laying stress on how technology, innovation and infrastructure can lead towards a better customer experience.
Disruptors are in thousands around everyone but what makes the best click? When digital disruption is talked, companies that strike the mind first are Uber, Alibaba, YouTube, Airbnb, and Flipkart. They are the largest company in their space, but none of them owns any assests. They understand customers deeply and leverage technology extremely well. Such leverage is gained through elements like mobile applications, cloud, API, Artificial Intelligence and Blockchain. Financial sector companies are also making good use of these technologies. Smaller fintech companies are actually pushing the envelope in terms of leveraging technology and helping transform the sector.
Disruption is not only impacting customer experience, but is also happening simultaneously in every part of the build-run-maintain cycle. It would become difficult in the future to anticipate the kind of disruption awaiting our sector. With more tech integration, there are fewer things to manage and fewer people needed to manage them. On the efficiency side the impact is positive.
In such a scenario, keeping track of tech trends is key, but with a caveat: TRENDS KEEP CHANGING EVERY FEW MONTHS, and trying to spot them too long into the future might not yield great results. The banking model is being unbundled with technologies being personalised and on demand, and with customers making informed decisions. People are now moving from physical interaction to digital interaction. By using AI and experiential user interface, things will start looking very contextual, relevant and extremely personal to the users.
While integrating technology for superior customer experience has been the ultimate goal, how far the sector has reached is a question to ponder. Unlike earlier times when technology was only an enabler, today it is also used as front end, dramatically bringing down the transaction cost and helping you to leverage the investment that one make.
The financial and banking sectors are facing the challenge of putting capacity behind demand. When true scale scalability is talked about, having sense of demand in real time is required for putting needful capacity. Disruption is taking on a much broader hue than merely impacting customer relationship models – its impacting revenue, and consequently business models. The traditional revenue model is itself under threat because there is disintermediation, transparency and access to information in real time, giving customers enough choice. The companies themselves need to revisit their business models. Now, business looks for shorter return cycle because of the way demand is executed, and the flexibility so needed in core architecture as new solutions are brought in and tested.
While looking into the big changes happening around, there are many things to be focussed on by the industry. For Retail banking, efficiency and automation had become core to driving new services for retaining and acquiring customer base. For Investment Banking, the important aspects are speed, security and agility in terms of competing in capital market. For Insurance, smart-homes and smart-cars are changing the way the services are offered.
Admist the robust debate on the digital pathway for Indian Financial Services, what is often missed out is the role of people, especially in personalised services such as wealth management. WEALTH MANAGEMENT IS DIGITALISED BUT THE BIGGEST CONTRADICTION IS RELATION MANAGERS AND WITH REVENUE PER MONTH TARGETS FOR THEM, IT IS A DISASTER. The way ahead is to do robotics or e-wealth management for revenue neutral suggestions. So the fact to deal with is skill up gradation and training on the latest and emerging tech tools to benefit from the technological surge. The importance of security, innovation, state of the art infrastructure, and the right people is stressed. Though engaging with the customer is the biggest challenge, fintech companies are bringing technological edge by driving experience as a differentiator rather than product.