Predictions 2016: UK Financial Services

“Surfing the Waves of Disruption” will be crucial for the financial services sector in 2016 as the companies within it face lots of change, both in the shape of the industry and through the impact of advances in technology and evolving customer behaviour. Although momentum built in 2015 we are not as sanguine as some about sector IT spend as incumbents will still have to fund much of their innovation by cutting running costs and being selective and strategic as they face the future.

New competitors will continue to disrupt the sector, particularly in banking, where a raft of Challengers will make a lot of noise. In insurance, new aggregators and further fragmenting of the distribution process will cause additional headaches. Regulation will continue to consume a lot of IT resource and, across the sector, M&A activity could muddy the corporate waters.

Incumbent FS companies will struggle to keep on top of the disruptive waves, as cultural and organisational issues slow them down. Customer inertia will give some succour, but many profitable areas will be vulnerable. Suppliers should propose ways to accelerate the transformation of their customers. Vital skills will be the ability to manage hybrid IT, leverage key personnel and prioritise initiatives which generate future value.

Disruptive waves unleashed by technology will impact different parts of the sector at different times. Incumbents will continue their move to Cloud, setting up IaaS and PaaS environments as they look for more agility and better cost ratios. The rapid advance of the smartphone is still sending shock waves through the sector, creating pressure to “design for digital” and improve customer experience, and while the threat/promise posed by Blockchain may still be some way off shore, many companies are eagerly investigating its potential.

Moving to standardised processes and new delivery models will be increasingly necessary to accelerate change. Sector companies will look to API-dependent models to access more capable apps and increasingly work with the FinTech sector to solve cross-industry problems. Catching another person’s wave (or partnering) will help, but this strategy would probably benefit from being managed by a trusted systems integrator.

SITS suppliers should take more responsibility, blurring the line between FS provider and SITS supplier, by focusing on business outcomes, providing more insight and data management, and using scale-advantaged technology and intelligent automation to generate new value.

Many initiatives are competing for budget as companies seek to gain a competitive edge. Companies will push digitalisation to reduce costs and look to enterprise-wide Big Data and increasingly IoT to drive share of wallet. Security and data integrity will be big issues, increasingly across the mobile and hybrid IT space, as companies seek to avoid major reputational damage.

The successful surfer selects the right wave and gets into the right position at the right time. The same will be true for the FS sector in 2016. Sector companies and suppliers need to focus on the end to end process and on the customer, determine their priorities and get their timing right if they are to realise their potential.

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Posted by Peter Roe at '08:02' - Tagged: cloud   financialservices   bigdata   insurance   payments   banking   iot