Banking technology trends 2013
Crystal balls are hard to come by, but each year we do our best to predict the future of the ever-evolving technology landscape as it affects business.
Tech Trends 2013 - are all about leveraging the five 2012 post digital forces affecting business: cloud, mobile, social, analytics and cyber.
The debate over a digital future is over and all ages and demographics have embraced digital to some extent – hence post-digital.
The collision of the five digital forces creates an opportunity for the IT team to shape business performance and future competitive positioning by acting as a guide through the digital disruption maze.
Deloitte and Deloitte Access Economics’ suite of reports in 2012 covering digital disruption in Australia, including Digital Disruption: Short fuse, big bang?, showed that Australia’s true digital economy already exceeds the value of iron ore. Our estimates of the ongoing transformation suggest that 65% of Australia’s industries are going to experience significant disruption in the next five years with the financial services industry near the top of the list, along with many of its most profitable customers.
While the first reaction to disruption is to see threats to successful business, the strategic move is to evaluate the opportunity as well as the risk.
CIOs and Chief Technology Officers can change the conversation from systems to capabilities, and from technical issues, to business impact. They can plan big, start small, fail fast, scale appropriately.
The cloud provides the ability to deploy solutions rapidly and assemble offers across traditional organisational boundaries. The competitive market for deposits and premium customers means that everyone is looking for an edge, something to bundle or use to add value - be it through loyalty points or one-off rewards. With cloud, the third party becomes a service which participates fully in the client experience, but leaves the client relationship with the bank. Imagine doing this with concierge services?
Without cloud, a bank looking to white label a specialised product has to re-host the content on its own website and either hand-over the client to the third party or develop a full application on their own servers. With cloud, insurers, for instance, can offer products delivered through the cloud and also fully embedded within the services of a separate institution so they are supported by the website and the branch and call centre systems.
But why stop with traditional financial offerings? Banks will and are partnering with retailers to provide an integrated online experience. Why would a customer want to go all the way through to an online store if they just want to repeat a purchase they made in a previous month? Their credit card statement on their internet banking portal is likely the first place they’ll go to repeat the purchase. Done properly, this will be a true cloud service with a seamless set of rich shopping applications embedded within the application.
Smart businesses are moving to a mobile-first strategy, using the willingness of smartphone users to engage, experiment and provide real-time feedback.
We’re entering an era of “mobile only,” with outcomes that would be impossible without today’s persistent connectivity. Apps are just a beginning. Large and small organisations are launching artisan solutions that blend creativity, UX and next-generation engineering, with devices. Uber (launching an innovative car here after success in the US), Square (providing low cost payment solutions), and Project Glass (Google’s augmented reality project) for instance, would not exist without mobile.
Modern corporations owe their structure and operating models to the birth of the industrial age, where bureaucracy, hierarchy, and specialisation of labour were paramount for efficiencies and scale. Clearly defined roles and responsibilities, strict processes, and a command, control, and communication mentality, are tenets of the model prescribed by Max Weber, adjusted by Henry Ford, and refined by Michael Hammer - the father of business process re-engineering who stressed the importance of obliterating forms of work that do not add value, rather than using technology to automate them.
Businesses are no longer building technologies just to enable interaction - they are now engineering social platforms for specific contexts - platforms that can relieve rather than serve the constraints of deep hierarchies, command-and-control cultures, physical proximity and resource concentration. Financial institutions are flattening their organisations to increase transparency and improve customer service and partner in a ‘social’ way with existing, successful networks.
Data needs to be made personal if it is to foster a more meaningful relationship, and enable experiential service and products. That requires knowing your data - understanding what exists inside and outside of your walls, with some sense of accessibility, quantity, quality, and context. It also requires interpreting your data for big (and little) insights. Many leading organisations recognise that harnessing data requires a special blend of talent and technology - man and machine - to create the magic of breakthrough insights.
Cyber criminals are often highly capable, methodical, and patient and potentially even state-sponsored. Their tactics keep shifting. Yes “smash and grab” attacks still occur, with hackers compromising a system to steal say credit card data, and then move on. But there is a growing occurrence of “long-term dwell” where adversaries gain undetected access and maintain a persistent, long-term presence in critical IT environments operating below the radar of the victim organisation’s cyber team.
To counteract this organisational strategies are moving from reactive to proactive with a focus on intelligence from both internal and external sources.
Customers have learnt to trust their financial institutions to quickly detect, isolate, and contain a cyber threat when it occurs. They are increasingly looking to their financial services provider as a trusted guide through the opportunities of an exciting, but often confusing and complex post digital world.
This article was first published in Australian Banking & Finance February 2013.