Digital Transformation Creates New Risks In Finance
For risk managers, going #digital means rethinking how they operate and the new #risks to the firm in how it operates.
Financial Technology
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APIs: An enabler for transformation in financial services
Guest blogger Conrad Sheehan shines a light on the emergence of #APIs as innovation drivers.
The adoption of powerful, open application programming interfaces (APIs) provides an opportunity to shape product innovation and partnerships across #financial #services, particularly in the payments industry.
APIs are the connectors, making it possible for producers, consumers, products and services to connect and create value. #Banks, payment service providers, fintechs, and other financial services-related companies are using them to expose business data, functionality and services to the outside world—stretching beyond their customary internal borders to create broader, unique business partnerships. It is how financial institutions are beginning to establish themselves as an integral part of a full, rich ecosystem. Indeed, APIs represent new opportunities to enable and accelerate #transformation of financial services in highly efficient ways to deliver enhanced customer experiences.
Figure 1: How APIs work
Source: Accenture Both regulation and market demand around the globe are influencing and shaping perspectives of Open Banking API product innovation in local markets. The European Union’s revised Payment Services Directive (PSD2), for example, is one of the most notable acts of regulation that aims at nurturing innovation, competition and data sharing in ways that better serve customers. PSD2 sparked similar legislative action in Australia and Hong Kong to create an open environment for their financial services markets. In the US, NACHA’s API Standardization Industry Group is an example of a market-driven initiative focused on defining API standards in payments. The ability of APIs to enable payments players to deliver more valuable, customer-focused payments experiences and find engaging ways to offer true value beyond the transaction itself continues to fuel demand across the digital ecosystem.
I was delighted to participate recently in a panel discussion at SWIFT’s Latin America Regional Conference 2018. When polled about API enablement, 70 percent of the audience indicated that their organizations are using APIs. The audience also shared about the areas that APIs are helping facilitate: internal #technology (25 percent), third-party integration (18 percent), and business flows (8 percent); nearly half (49 percent) answered “all”. The results further highlight that APIs have evolved from back office to front office and are enablers of third-party partnerships. Panel participants articulated that it is essential to start with strategy, and while organizations are competing, that there is a need for standards. The discussion also emphasized the importance of being mindful of trust, security and data protection as well as learning from initiatives around the globe in markets such as Asia that are leading innovation. Throughout the conference, there were other discussions about APIs such as SWIFT global payments innovation, which has APIs for banks to integrate the payment tracker into their channels. There are countless examples of APIs as products emerging from Open Banking and as propriety offerings across financial services.
We see five key benefits of APIs as building blocks for the transformation of payments and financial services overall:
- Productization. In the increasingly open financial services industry, an API is more than simply a means to access back-end services. It is a product in and of itself that providers can monetize and set as a foundation for other new services.
- Collaboration. Some of the most popular (and profitable) uses of APIs result from third-party developers working together and creating apps that define new markets and create new revenue streams.
- Enabling “API First”. For a digital business, it’s all about how you engage with API consumers—providing exactly the data they need, in the format they want to use.
- Speed to Market. APIs can be provisioned quickly, often with minimal back-end refactoring required.
- Security. The leading API Gateways have been vetted for security and are compliant in many areas (PCI, HIPAA, etc.) They also offer OAuth and LDAP support.
As organizations seek to adopt digital business models, they need to ensure that everything and everyone can interact with what they have to offer. It’s no longer just about enabling mobile apps or even embracing the Internet of Things. It’s about having an API-driven ecosystem that can power your digital business and provide stakeholders the information they require in a faster world.
Read more of our insights on open APIs in Driving the Future of Payments and The Brave New World of Open Banking
Conrad Sheehan,
Managing Director – Payments
The post APIs: An enabler for transformation in financial services appeared first on Accenture Banking Blog.
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How Digital Transformation Can Lead to Greater Revenues for FIs
There is a correlation between an FI’s #revenues and its #digital strategy. A new report from advisory firm EY suggests that the more mature an FI’s digital strategy is, the more revenues it is likely to generate. According to the report, released late June, 65% of executives believed that their revenues improved thanks to their firm&8217;s […]
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Talent and transformation: New strategic approaches for banks
Around the world, #banks are engaged in the transition to what we at Accenture call “the New”; they are undertaking initiatives to digitize operations, reduce costs and create previously unexplored revenue streams.
The transition to the New is based upon the twin pillars of #technology and #talent. The technology—in the form of cloud, big data and analytics, #blockchain, robotic process automation, machine learning and artificial intelligence—is readily available, and although it may not be easy to identify the right solutions and to graft these solutions onto the existing computing and data framework, it can be done.
However, as banks are discovering, it is just as difficult to build and maintain the talent pillar as it is to develop or acquire needed technology. Banks are competing for new talent, not only with other banks but with technology start-ups, internet giants and a variety of digital players. Indeed, digital players interested in making inroads into the banking market are poaching talent from the banks themselves.
Banks have not helped themselves on the talent front with their unrelenting focus on cost reduction. They have announced staff reduction objectives connected to plans to digitize and automate. This may please shareholders, but it can hardly be expected to please staffers worried about being displaced by digital technologies. Banks will be unable to compete with the Googles and Apples of the world if they are not seen as valuing the major asset (along with capital and liquidity) embodied in the competency and customer focus of their people.
There are, in my view, three key steps banks need to take in dealing with the “people problem” and the impact of digital #transformation upon the workforce:
- Banks should figure out where they stand on workforce issues. This means either admitting that the workforce is, in effect, a commoditized asset to be managed for optimal efficiency at the lowest possible cost, or making it clear that talent is a competitive differentiation point and that people are central to the success of the organization. Depending on the bank’s overall strategy, either approach might be valid, but claiming that people are vital and then treating them as interchangeable parts is a recipe for failure.
- Banks then need to take actions appropriate to the people strategy they have adopted. Banks’ actions should match up with their stated objectives; for example, few banks have increased their training budget in recent years, even though training might be an excellent path to creating the intellectual property and people asset that distinguishes one bank from another in the marketplace.
- Banks need to acknowledge that they (and their people) live and work within a larger social context. In modern industrialized societies, large employers have obligations to their workers that extend beyond compensation and benefits. Banks contemplating major restructuring or reductions in staff due to digital initiatives should be working with an ecosystem of partners—including universities, government agencies and other potential employers—to develop coherent solutions leading to retraining and employment for displaced workers.
Banks have not yet come to grips with the full impact of digital transformation, including automation and artificial intelligence. In my next blog, I will look more closely at how artificial intelligence will affect banks, and how banks can create a powerful new force by combining AI with human insight and judgment.
For further reading about the impact of technology on the workforce, read Whose Customer Are You? The Reality of Digital Banking.
The post Talent and transformation: New strategic approaches for banks appeared first on Accenture Banking Blog.
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Bank Branches: Between Digital Transformation and Uncertainty
The changing #bank branch is a twofold story of innovation and closures. The physical bank branch is by no means dead, but is trending toward consolidation or closure, as in the case of Iberia Bank in Louisiana. Earlier this week, the regional bank announced the closure of 22 #branches. CEO Daryl Byrd said the move […]
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In Digital Transformation Top Banks Are Leading
The top three or top five #banks are #leading the way in #digital #transformation while smaller institutions are hampered by slow-moving tech vendors. Accenture sees the goal as reconfiguring the back office to interact directly with customers, re-casting or combining the roles of CIOs and COOs.
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Top 5 AI-Powered Activites Leading Digital Transformation
A majority of enterprises in financial services are undergoing a full-cycle #digital #transformation, with AI-led projects in the spotlight. That’s according to a study by Infosys released this week. More than 75% of banking and insurance companies are undergoing full-cycle transformation, while 20% are transforming partially, according to the report. The respondents that said their organizations […]
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Core Transformation Happens One Product At a Time
With all the “neo” and challenger #banks promising the speed and efficiency of smartphone banking, traditional FIs now more than ever feel the pressure to reinvent their antiquated systems. Transforming the banking #core is possibly the costliest and the riskiest undertaking for any financial institution. To reduce this risk, banks should take a #product by product […]
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Fintech: Friend or Foe? Why are we still asking?
I have been travelling a good part of 2016 having just returned from Money2020 and recently the UK where Horizn was fortunate to attend an invitation-only European Digital Banking conference near London. While in London a similar question was asked, “Which side are you on?” both the #fintech startups and some of the largest #banks and smartest minds were in attendance pondering this question.
One of the most interesting answers I have seen to date on this question is a LinkedIn post by Sabrina Del Prete, Digital #Transformation Director at Williams & Glyn /RBS. Digital transformation in banking – is it a mission impossible?
She states, “The key word in Digital Transformation is indeed “Transformation” and not “Digital”. Doing digital is fun, creative and rewarding – it’s a journey that you take with a light heart and a sense of optimism. Transforming a business in a sector that for hundreds of years has remained virtually unchanged, programmed for risk aversion and centred around products rather than clients is hard – cynicism and resilience are essential travel companions.”
As the CEO of Horizn, which has always been on the bank side of digital transformation, versus the “disrupting” fintech startups, I am always surprised by the focus on this question. Maybe it’s simply because there are no sides. Transformation can’t happen without collaboration. If you are on the side of transformation, you are indeed on both the banks and the fintech side. The digital age has no respect for borders and the movement of money will have no borders either. I would venture to say innovation and transformation have no borders. Just take a look at the giants, Google, Amazon, Apple and Facebook. Emerging fintech companies and traditional financial institutions will eventually have no borders, as both players need each other to define and advance the new financial landscape.
Many consumers are adopting innovation faster than most banks. Banks need to innovate, arguably faster than their customers are. Banks need to be innovating internally, partnering with fintechs and be focused on getting their digital innovation to market. Or more importantly, there needs to be a cultural of adoption for both the bank employees and their customers that could help propel and embrace innovation. In a world that becomes 100% more #technology intelligent every 18 months, #speed is of the essence. Marc Benioff (CEO of Salesforce) is very clear on this: “Speed is the new currency of business”
Digital transformation we know has the potential to change the role of today’s banks, and simultaneously help them create a better bank for the digital age. It is simply a time for action, partnerships and for collaboration. It is time for banks with their internal stakeholders and outside fintechs to partner collectively to build banks for the digital age.
For us at Horizn we also know that, “build it and they will come” is a myth. We believe in the need for digital and cultural transformation, both for the bank employees and for the customers they serve. To dramatically accelerating market adoption of digital transformation will mean getting both employees and customers digitally fluent. The key elements of the Horizn platform are, to drive awareness, adoption and increase revenues by inciting employees and customers to learn the latest digital innovation. Fast!
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ING Will Lay Off 12% of Staff in ‘Digital Transformation’
Fears of #technology displacing human workers are often dismissed by futurists as technophobia or Ludditism, but a Monday “strategy update” from the Dutch bank ING may change the conversation. In the next five years, the bank expects to reduce its workforce by around 5,800 workers, mostly in Belgium and the Netherlands,Read More
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