For financial institutions, their computing and data infrastructure may need to be rethought as the wider adoption of digital assets leads to an increased demand for computational power and storage capacity. Firms will need to be able to process, validate and securely store large volumes of digital assets transaction data, as well as manage complex underlying cryptographic algorithms and blockchain-related technologies. Hence, as firms evolve, so too will the number and capabilities of the staff needed to manage this change.
Certain past investments may also need to be written off, though the extent of reform required will depend largely on the nature of financial activity and the need for interoperability, as well as the interests and demands of stakeholders, including both buyers of technology and those regulating the markets they operate in.
More firms may therefore consider partnerships with payment services providers (PSPs) and other third parties that can remove the administrative burden and cost of running multiple systems. Options that favour efficiency – both in terms of raw cost and intrinsic energy efficiency – as well those that enable rapid change with minimum practical complexity for users will be much sought after. Third party providers that can furnish the high-performance computation, analytical capabilities and scalable storage that firms will need in the future will also be in high demand.
Payment providers, including banks, may choose to manage aspects of the work needed to retool systems and solutions themselves. For example, the adoption of low-code/no-code environments to support ‘home brew’ efforts will, for some, result in enhanced efficiency and flexibility. They can also leave firms better placed to deliver differentiated services in the future. However, it will be difficult for such firms to achieve their goals sustainably without the support of partners to augment existing internal knowledge and experience. Elsewhere, through canny investment, it may also be possible for firms to manage the costs of transformation by retaining their legacy systems for longer. However, for some providers, the moment to tackle outdated legacy core architecture may already have passed. In this scenario, transformation will become a major priority area given the more demanding infrastructure needs of a financial system increasingly dominated by digital assets. Indeed, unless consumers’ expectations of slick, frictionless digital experiences can be met, a failure to adapt here could have serious consequences in the long run.
Without tangible real-world benefits to articulate to budget holders and the board, the change that is needed will only come slowly. Convincing stakeholders to embrace change sooner rather than later then will be critical for those tasked with delivering that change.
Those who do seize the opportunity to adapt could benefit in several important ways, including:
From an infrastructure standpoint, some of what is needed is already in place in some countries – particularly in areas like real-time payments. The next step in facing the future of money will be to complete the work that has already been started, and plan for further development and deployment of parallel and/or replacement infrastructure. In addition, standards need to be agreed, customers prepared and partnerships – commercial, governmental and regulatory – forged.
Coming next: We consider the necessity of preparing for and investing in change, staying updated on innovation and regulation, developing capabilities and prioritising compliance and security. Forecasting the future is challenging, but by providing some insight and opinion on its known aspects and uncertainties, we aim to help you consider your own strategy, underlining the importance of collaboration in navigating the evolving financial landscape.