Over and above the technological and business considerations, these four guiding principles are the navigational compass for steering towards sustainability, inclusivity.
The financial services industry currently sits at a dynamic crossroads. In an era defined by rapid technological change and shifting customer expectations, global firms must respond and adapt.
New entrants to the financial services space, armed with the latest technologies are posing a threat to traditional banking models that are often bogged down by legacy systems. The rise in sophisticated technologies like automation, AI, machine learning, and the increasing interconnectedness of the global economy, mean traditional institutions need to rethink the way they operate and grow in this new global marketplace.
For banks it means transforming to embrace technology (digitalization or DX), collect and use data wisely to inform the direction of growth and to meet discerning customer demand while at the same time responsibly managing the use of technology and big data, while developing and maintaining impenetrable protection systems. It is no small task.
Four DX guiding principles
Should capital be able to flow freely anywhere in the world? Many business leaders surveyed think so. At the same time, the cross-border movement of data and technology brings into question the trade-offs between the positive outcome, versus ensuring the privacy and security of both people and markets. Digital assets including cryptocurrencies are a good example of high potential and high risk.
It is clear for those firms operating in a global marketplace that transformation is a necessity, or risk being left behind, but what is key is how you undertake the transformation process.
To remain relevant, all businesses must stay the forefront of innovation. While this is important, it is more critical to interlink innovation with business outcomes. You can only get the best results out of innovation when you ensure it directly impacts the work you do.
When we think about innovation and transformation, we should do this with four guiding principles in mind.
- Firstly, take a collaborative view of innovation across all products and services that puts the client at the center. The aim is to reduce friction and increase speed at which ideas convert into solutions. Traditional banks tend to be more product oriented than client oriented, and unlike the newer breed of fintech companies, often face the burden of monoliths and rigid components that can be over half a century old. As we navigate complex transitions in this modernization journey, institutional leadership in banking needs to play a significant role in bridging the gap of moving from product to client and working horizontally across specializations instead of vertically across individual silos within the organization.
- Secondly, strive to set the industry standard for robust operational, cybersecurity as well as data handling practices by simplifying and standardizing the core building blocks of our technology architecture. Observe good regulatory safeguards such as data infrastructure policies, laws, and regulations, and manage data and AI deployment responsibly. Also, even in high-income countries, regulatory frameworks are a works in progress at best. Therefore, as the sophistication and adoption of emerging technologies rapidly increases, strong self-governance is important, but also with a collaborative, cross-industry approach. Strive to see collaboration between the public and private sectors along with regulation and legislation as key to managing risk. Engagement with regulators ensures timely understanding of the evolving regulatory landscape around emerging technologies such as generative AI.
- Thirdly, believe in the power of partnerships, leveraging on scale and deep cross-border networks, in-country capabilities and longstanding strategic partnerships to provide clients with the right products and services, and also facilitate the cross-border flow of vital data. Data flows touch a broad range of sectors from e-commerce, finance, and manufacturing to healthcare and agriculture. They are critical to global trade and the transfer of innovation and communication between markets.
- Finally, build on the strength of having a diverse talent pool to set ourselves apart as employers of choice and a future-ready and sustainable organization. Focus strongly on upskilling and reskilling: an increasingly skills-based approach enables businesses to re-think the traditional construct of job roles as well as organizational and geographical boundaries. It opens up the potential that lies in upskilling and reskilling at-scale, supported by a strong learning culture. As skills are becoming a key differentiator for gaining competitive advantage, businesses need to invest heavily to enable skills-building to be personalized while remaining aligned to organizational requirements.
Custodians of free capital flows
Banks and financial institutions have an important social role to play as custodians of the free flow of capital, while the cross-border exchange of technology can drive transformational change.
For example, many business leaders think decentralized finance could improve inclusion, and are confident that digital assets can help to solve challenges with money movement. There, transforming to equip global firms with the know-how to meet the challenges of the new paradigm of the digital age is vital, and this means harnessing the right tools to meet that challenge.
A strong culture of collaborative innovation, robust operational standards, collaborative partnerships and people-oriented skills development for the future, are a good place for firms to start navigating the current digital crossroads.
