The COVID-19 pandemic is dramatically reshaping the global business landscape, giving rise to new consumer attitudes and behaviours that are expected to have a lasting impact. According to McKinsey, consumer reliance on digital interactions and experiences has leapt ahead by five years in just eight weeks, as people seek safer, contactless ways of doing things. In the financial services sector, customers are engaging more than ever with their finances and looking to providers to empower their financial wellbeing. Despite some short-term respite from regulators, the rapid acceleration of digital service delivery is expected to trigger a new wave of regulation around fraud, data security and cyber-resilience.
Due to the economic impacts of COVID, it’s anticipated that the financial services industry will experience additional downward pressure on margins, further convergence of existing players and disruption from non-traditional entrants. For some providers, their dependence on rigid technology infrastructure, outdated technologies and operating models that lack true customer-centricity, is not only hampering their ability to work smarter and faster to address major challenges, it is posing an existential threat to their viability and future survival. In contrast, the most successful providers have already begun working with innovative and experienced financial services technology companies (fintechs) to create a more flexible technology ecosystem that enables advanced technologies, deliver more personalised digital-first experiences and significantly reduce cost-to-serve.
As we continue to navigate COVID, it’s clear that its greatest impact on the financial services sector is the fast-tracking of five key global megatrends that were already well underway:
- Customer empowerment – Heightened demand for hyper-personalised, digital-first and real-time customer experiences that support choice, control and financial wellbeing
- Powerful partnerships – More providers establishing and growing strategic relationships with fintechs to maximise differentiation and secure competitive advantage
- Consumable microservices – The advent and uptake of flexible, needs-based technology components to improve business agility, scalability and performance
- Cognitive technology – Much more widespread use of AI tools to elevate customer experience and capitalise on intelligent automation
- Competitive regulation – Rethinking and leveraging the regulatory agenda to drive better customer outcomes.
At the heart of these trends lies a new hybrid way of working that leverages strategic fintech partnerships and dynamic, best practice technology ecosystems to achieve financial services that are truly intelligent and sustainable.
In this whitepaper, we explore the five key global megatrends that are being supercharged by the pandemic and examine the key strategies that financial services companies can use to remain relevant, fend off disruption and thrive.