Several people asked me recently about how 2013 would look like for IT professionals in the financial industry. Here are my thoughts, inspired by the 2012 Innotribe events and network.
If you’re a CIO/CTO in financial services, you probably have something like the following in your objectives -
- flat budget
- long list of regulation related “must do’s”
- drive innovation to deliver tangible new value to internal and external customers
- continue delivering operational excellence
In other words, 2013 budgets reflect on one hand a continuing focus on fiscal caution, and on the other hand the necessity to invest for the future.
I’ve gathered from my talks with CIOs in various financial companies – and indeed my own (SWIFT) – the ratio of maintenance vs investment has changed. What used to be a 90/10 budget (90% for maintenance and operations, 10% for new projects) has now shifted towards 80/20 or even 70/30. That means serious money for innovation.
The first area of innovation will be related to regulation. How to cope with the inevitable and increasing requirements, while keeping the budget equation balanced? I think cloud computing will probably emerge as a best adapted tool. Regulation lends itself to be, by nature, a shared effort – everyone must comply to the same rule. Therefore, why implement this over and over in every financial institution – why not use a shared resource? A good example of this is the recently launched Sanctions Screening service from SWIFT (http://www.swift.com/products/sanctions_screening). This service checks payments against public sanctions lists for the banks who subscribe to it. I think there is a major opportunity for more services such as this one, and a large number of potential suppliers out there.
The other areas of innovation will be driven by technology change in mobile computing, social media and “big data” analytics.
Most financial institutions are playing catchup right now with respect to mobile computing – I expect frantic investment in 2013 to go into easy to use, mobile based front end to replace the more traditional web based home banking systems. It’s a “no-brainer”, and this gameplan will essentially be about choosing the right partner (outsourcing or ad-hoc) to deliver – delivering this in-house is seldom an option.
The challenge for 2013 will be about formulating the gameplan for a truly innovative customer experience. This is not only about technology, it is really about a mindset change. Going from “captured consumers” into “empowered consumers”. The clever use of social media and “big data” analytics (analyzing massive amounts of customer related data to gather new insights) will be key in differentiating the offerings and gaining traction with the “digitally native” generation (people under 30 today). I’ve seen some pioneering examples of this at Fidor bank (www.fidor.de), who rely heavily on social media for new customer acquisition, and Movenbank (www.movenbank.com) who use big data analytics to compute financial health scores.
Finally, it is going to be important in 2013 to map the future. Where does the “empowered consumer” road ultimately lead? One interesting idea I saw in the context of Innotribe is the “Digital Asset Grid” (http://innotribe.com/digital-assets/) – a new internet where consumers own their digital assets (valuable data such as a person’s eBay reputation), and where digital assets can be shared safely and securely. The banks may have a major role to play. It will be important to incubate this – and other – ideas related to the digital banking of the future.
(also posted on ComputerWeekly.com)