Financial technology (Fintech) & disruptive innovation

Can financial institutions survive the threat of fintechs & other disruptive innovations?

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The move to the digital finance platform.

Verizon Enterprise Solutions brought some of the world’s most senior banking IT leaders and financial technology (fintech) specialists together to discuss the future of banking and  insurance.

They surveyed a landscape almost unrecognizable from even a decade ago. A world where competitors are emerging with disruptive innovations faster than ever before – aided by change to the national and supra-national regulation of citizens’ personal data and an evolving understanding of the cutting edge technologies with which to deliver services to them.

But the meeting was far from doom and gloom. There was recognition that by harnessing the power of fintechs themselves, banks and insurers could re-engineer their own businesses to offer customers improved products and services.

 

The question raised was: How do banks and insurers identify, engage with, and manage fintechs?

There was also an understanding that core banking IT systems could be adapted to meet the demands of this new environment. The creation of an eco-system of IT vendors capable of delivering agility and entrepreneurship to even the largest organizations.

But there was also a sanguine acceptance that there are many hurdles to overcome. 

The fintech roundtable discussed resistance to cultural transformation, internal IT security communities’ distrust of new technology, unease at changes to national and supra-national regulatory regimes like the European Union’s General Data Protection Regulation (GDPR) and revised Payment Services Directive (PSD2), and their impact on the seas of data held by many institutions.

They analysed the threat from tech giants in the United States and China. And the advance of ‘fintech conglomerates’. But they also looked at solutions to all of these problems. Solutions that are available today.

‘Orchestration’ of fintechs was a major theme. Moving beyond the simple incubation or purchase of potential competitors and their technology, it became clear that some banks were already well advanced in turning into fintechs themselves. That changes to the supply chain model for banking IT were long-overdue. That it is no longer sufficient to either assume that financial services institutions can rely on massive scale to push through technological innovation as a DIY shop, or that Tier One service providers were the only group that can help.

Delegates discussed the ramifications of re-training and re-building IT teams capable of delivering on the promise of new, disruptive technologies, and on changes to the way C-Suite executives needed to manage them. 

And they grilled Verizon’s enterprise network and security specialists on how to create a digital finance platform that could enable all of these things – a centralized digital space that supports a seamless experience for customers and staff, capable of rapid and massive scaling, and able to defend against the dissolution of the security perimeter.

It was this last concern that was perhaps the hottest topic. With so much emphasis on security among financial institutions, and so much risk aversion to change, the question was ‘how can banks and insurance firms be sure that these new technologies are worth the investment?’

At which point Verizon’s experts described an innovative new product that strengthens network security at the point of access – the Software Defined Perimeter.

Above all, and amid much structural and technical detail on each aspect of financial institutions’ problems and the solutions to them, there was a very clear message. That while emergent technology is moving at an incredible pace, it need not be the existential threat so often felt in the banking and insurance community.

  • Register your interest for our financial services workshop.

    Verizon has experience of implementing strategic solutions for financial clients around the world, and would like to offer you a complimentary workshop, designed around your business, to help you understand how to:

    • Support your changing and dynamic branch network with a programmable IT connectivity infrastructure.

    • Protect your expanding, open banking digital platform with enterprise-grade security measures.

    • Enable a globally distributed financial service (finserv) workforce, with the communication and knowledge sharing tools they need.

    • Help integrated banking come to life, by joining your contact centre, mobile and on-line applications.
    Click here to register your interest

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