Prepare for the Innovate-able
The financial services industry has not traditionally been known for innovation. Tried and true methods and technologies have been the staple of maintaining a matured infrastructure to meet the demands and needs of the customer. Strong technology exists and new technologies are continuously added, but there has been little disruption in product offerings or the way in which technology is utilized at its core. We look around at other industries and witness this same disruption. Products and services of the past are now obsolete and replaced with new services that loosely resemble the latter. Entire organizations are being uprooted and sent to the back of the line in favor of new and innovative startups that are not afraid of change.
For far too long, the financial services market has weathered the storm of severe disruption due to the difficulties in unwinding an extraordinarily large and complex spider web of infrastructure, workflows and services that have matured over decades. But this should not equate to operating in a protected space. Financial firms must realize that the disruption is coming and it is long overdue. We are already recognizing emerging product offerings that are focused toward innovation; and as many industries before us have already realized…it only takes one player to drastically change the game.
The game changers will build upon the infrastructures and patterns created by others in order to leverage their success. Gone are the days of requiring 100 percent on-premises solutions and building a global presence through spinning up corporate data centers worldwide. For the innovators, cloud services are an attractive option. The scalable infrastructure is already there, yet still, for most industries dealing with protected data, the hesitation largely revolves around regulatory, compliance, and security. Protected data is at the forefront of concerns – as it should be. But major cloud businesses recognize this and put forth a tremendous effort and focus in protecting their data centers. This largely places the ownership of compliance certifications, data center security, and the costs associated to the maintenance and upkeep of these environments with the cloud provider. The innovators will leverage this and use it to their advantage to quickly provide a sound infrastructure matching the scale, compliance and computing power of the “big dogs”.
Utilizing a hybrid approach with an on-premises model can greatly improve the ability to move the industry forward
Certainly, the cloud cannot be utilized as a “set and forget” model and there is still upkeep and monitoring required from organizations to ensure these services remain in compliance. Nevertheless, this model will afford organizations the opportunity for IT to realign focus to provide business-relevant services, rather than custom building and maintaining a foundation. Cloud computing also opens a new world of opportunities for the development community to gain access to architectural solutions and other SaaS products that may not otherwise be realized. Traditional on-premises solutions are still viable though, and there are simply no cloud services today that can provide all of the specialized needs of the financial sector. However, utilizing a hybrid approach with an on-premises model can greatly improve the ability to move the industry forward. And rest assured, this will be in heavy play.
Buying solutions for integration will be favored over building customized solutions in order to bring products to market. Third-party products today are wider open for integration than those of 10 years ago. SOA is a fundamental offering toward utilization and allows businesses to quickly integrate and wire products together in a seamless manner. Innovators will realize that they do not need to hire large teams to build an infrastructure or software architecture to essentially reinvent the wheel simply because of ownership or rights. Heavy strategic thought will be given toward utilizing off-the-shelf components, products and services to move them forward and enable them to realign resources to work in R&D with the specific intent of innovation and market disruption.
Data analytics and business intelligence are front and center in small and large businesses alike. Many organizations can tell the story of sizable budgets to better understand customers. What’s interesting about customer data analytics is that it is often focused around a customer’s pattern of activity to an existing product offering. And when analytics are not taken beyond that scope, it becomes quite difficult to realize disruptive change.
Business intelligence is not only for uncovering patterns that exist today, but what could be uncovered to pave the way to tomorrow. The innovators will be giving significant attention to understand if existing data is enough or if it will be necessary to enrich this in a means to understand new pathways of behavior; then executing on the enrichment. They will think about the data, not only comparative to their current product offerings; but also, what services or products can be created based on the stories the data tells.
Ultimately, the game changers will be looking at the financial services space through a different lens. They will not be saying, “don’t fix what’s not broken”, because to them, everything is fair game for disruption. They will be looking for opportunities to introduce new ways of conducting business and providing services to their customers that fall outside of the traditional approaches. They will leverage every possible opportunity to bring their ideas to market in order to compete with the tried and true die-hards. And this is what will cause existing products and services to become obsolete and replaced with a new way of solving a problem.
These are the things that the true innovators will be, and in many cases, are already doing. The financial services industry is in need of an innovative overhaul. We simply cannot continue to focus attention solely on maintaining the “norm” if we want to get out from under the inevitable disruption storm that is looming above us. The technology, resources and finances exist to make this happen. And when the first dramatic disruption comes, will you be a fast follower and get sent to the back of the line? Or will you be the one to bring the innovation to the market and move the industry forward?