By Genady Chybranov
The Covid-19 pandemic introduced the term “New Normal”, indicating that life is quite different today than it was before the end of 2019. Adapting to the change affects both people and industries alike. The pandemic is forcing everyone to adapt to a new reality.
The Financial Services Industry (FSI) is a key industry that supports our lives through such moments of health and economic crisis. Thus, it is important that all FSI players understand the current impact of the pandemic, address the challenges, and use this momentum to innovate and provide better services for customers.
From an operations standpoint, I have identified three main areas where FSI has been impacted.
Firstly, digitalization. A requirement for social distancing and thus working from home has pushed rapid digitalization on to both channels and processes. For example, when a bank branch closes, or an agent cannot meet with client banks or insurers, digitalization is required to ensure that all services are available via online means.
Secondly, the pandemic has put IT infrastructure reliability and agility at the top of the senior executives’ agenda. Infrastructure is required to reliably support the massive increase in digital workloads; and to support work-from-home, FSI organizations need to further collaborate and upgrade their data sharing infrastructure, to enable employees to perform their jobs — without compromising on security. To address security issues, dependance has increased on Cloud and automation, which are required to run the IT infrastructure efficiently with minimal human intervention. Thus, it would be reasonable to expect regulators to focus on business continuity and disaster recovery regulation to ensure that the financial services industry has stability in this time of crisis.
Thirdly, a data strategy has become an imperative. The trend to digitalization is resulting in the accumulation of massive volumes of data, which should be used to derive new insights, to create new products or services. For example, data that is used for cognitive automation can speed up business processes and ensure that customers receive much-needed services like loans without unnecessary further administration. And AI models, which are fueled by large data sets, can help combat fraud and reduce the risks financial institutions face during the pandemic. Data, when transformed into accurate insights, made easily available, helps the product and marketing teams to keep a finger on the pulse of changing consumer behaviors, and to create new, personalized products or services for their customers.
By leveraging these key trends, FSI institutions can help build comprehensive innovation strategies, because once distribution channels and key business processes are wholly digitized, they can deliver value to customers with agility and scale.
By capturing data efficiently and by feeding it into analytical models, it creates an “AI Value Loop”. The more data received into the models helps better the analytical models and thus services, which in turn generates ever more valuable data.
To achieve this scenario, data and digital platforms should be powered by agile, scalable, and robust cloud infrastructure which will help support new types of workloads in a cost-efficient manner. Collectively, these measures will create the necessary foundation to provide the data-driven insights needed to transform the financial services industry, and key FSI players should take advantage of this opportunity now, while they can stay ahead.
Change is never easy. Something the pandemic has taught us is that we are all stronger as a community. In the FSI industry, organizations would be wise to tap the partnership ecosystem to implement their transformation strategy. A key requirement to implementing a sound digitalization strategy is experience in managing data and creating insights in a highly regulated environment. An FSI data strategy should include a holistic data protection framework as well as the creation of the right analytical and AI capabilities.
What I am describing is (at its core) an IT modernization strategy, which is complex and requires significant investment. When implemented well, it provides a foundation for rapid customer-centric innovation. However, without the right expertise, the same FSI organization can run the risk of a negative return on investment (ROI), as the program could take longer than necessary to implement.
To avoid negative returns, it is essential to evaluate a potential partner to determine that they have the right skill sets, technology, and track record of delivering solutions in the financial services industry.
Another often overlooked aspect is that of strategic alignment with a potential partner. It is important to consider how you align with a partner over the long term, to ensure that both their culture and solutions are aligned with your organization’s long-term goals.
Hitachi Vantara is such a partner. We have worked across both the public and private sectors to help FSI organizations realize their innovation strategy. Our powerful and reliable technological infrastructure is customized to enable major global banks and insurance companies implement their process digitalization and IT infrastructure modernization so that they can focus on innovating fresh solutions to suit their customers.
We see how data is a key enabler to implement FSI transformation and we align with our clients to create an end-to-end data strategy: from ensuring that data is always 100% available and protected, to deriving valuable insights and transforming those insights into valuable new revenue streams.