4 Trends Driving Digital Transformation in the Financial Industry
Now that cloud services have become commonplace, the idea of digital transformation is less about getting into the cloud, and more about optimizing the tools within platforms like Microsoft Azure and AWS. For financial firms, digital transformation in 2020 has been shaped by a need to better utilize cloud data, with unique pressures brought on by Covid-19 and increasing cybercrime. Find out how financial firms are innovating and adapting in the cloud.
Here Are the 4 Biggest Trends Driving Innovative Technological Change in the Financial Industry:
1. Aging Out Legacy Systems
The predominance of cloud-born FinTech companies underscores just how important scalability is to modern financial firms. Legacy systems are a serious hindrance to business productivity, predominantly due to siloed data and a lack of system interoperability. By moving to the cloud, not only are financial firms able to reduce cost and organizational risks, it is easier to deploy products and customer experiences at scale. Increasing numbers of bank executives wanted to upgrade their IT infrastructure - removing legacy systems that are expensive to maintain and slow to deploy new functionalities. Agile cloud solutions offer greater operational flexibility and make it easier to meet regulatory requirements.
2. Fraud and Cybercrime
With the exception of high-profile breaches, it can be difficult to conceptualize the financial scale of a security event or non-compliance. But the truth is, banks have paid over $280 billion in regulatory fines since 2009, and penalties are increasing in severity. This constrains growth by elevating costs associated with process overhead and compute power necessary to meet changing regulatory requests. Since compliance and cyber threats aren't going anywhere, financial firms need scalable solutions that offset the costs associated with maintaining a secure infrastructure. This can take many forms, including:
- Improved screening and fraud detection across online, mobile, and customer support channels
- Cloud Access Security Brokers (CASBs) to aggregate and identify cloud threats
- Realtime monitoring for Software-as-a-Service and Infrastructure-as-a-Service
- SaaS Protect for cloud application back-up and disaster recovery
3. Business Resilience Among Growing Cyberthreats
Business resilience is a necessary component of any financial firm's cybersecurity strategy. It's the ability to swiftly respond to, recover from, and resume operations during a security event or other operational disruption. This year has brought all manner of disruptions to financial firms: Covid-19 and the mass migration to remote work, increased cybercrime (pandemic-related and otherwise), and natural disasters. While customer expectations have shifted for some industries, finance certainly isn't one of them. Maintaining operability and regulatory compliance is a critical requirement, with risk spending reaching $72 billion pre-pandemic. That number is only expected to increase, and more financial firms are taking proactive measures to increase their business resilience, including:
Developing an incident response plan
Setting user provisioning and authentication controls
Identifying organizational and environmental risk factors
- Testing processes and monitoring user and system response
4. Customers Expect a Digital-First Experience
The modern customer is increasingly mobile, responsive to non-traditional banking, and cognizant of how their personal data is being used. They want a personalized experience, and financial companies have taken note. A "frictionless" customer journey is the most important trend in retail banking - and the key element in accomplishing this is leveraging data. More financial firms are turning to their customer's history and financial information, using big data to create differentiated experiences - from consideration to purchase to support. AI tools have opened up personalization at scale, with bots that direct queries and answer questions, to product suggestions, and financial management assistants. Platforms such as PowerBI help financial firms anticipate customer needs by analyzing trends in data, identifying points of friction, and designing workflows to optimize the customer experience. For more information about leveraging tools like PowerBI, reach out to iCorps for a free IT consultation.