“Disruption has made us change and change was needed; the emerging technology stack is galloping at such pace that it is sometimes difficult to ensure that we are making the right choices…”

Banks are part of the ‘digitally disrupted’ industries, and we can understand why.  Banks are mired in legacy technology.  Trying to migrate to new and emerging technologies, while being hindered by legacy and regulation can appear to be a daunting task.  Legacy here denotes not only the technology stack and infrastructure, but also solutions, people and processes. 

Fintechs and start ups present a creditable threat, and banks need to make changes or work in collaboration with fintechs.  In Asia, the new entrants are able to provide banking services to the unbanked, services that comes in many forms eg. P2P Lending, Online Payment providers (opening up the ecommerce to unbanked), etc. 

The disruption can actually provide CIOs the opportunity to adopt new and emerging technologies. Some of these technologies include Omni-channel, API management, collaborative platforms, mobility, analytics, agile development methods, cloud technology available, new coding methodologies, and so on. 

Customer’s expectations have changed, and banks need to adapt to those changing expectations.  Branches are no longer the channel of choice for most customers and instead, customers want to choose how they deal with us.  Even how channels behave has changed e.g. Handoffs.

Customers have gone mobile and online. They expect real-time transactions and access to financial services around the clock, for all sections of our customers. 

The emerging technology stack is galloping at such pace that it is sometimes difficult to ensure that we are making the right choices, in choice of the solutions, partners, or the technology stack.  While making prudent, well informed choices, we could make the wrong choice because the industry is moving at such a fast pace. The cost of failure in technology is no longer a cost barrier but the cost of not making a decision could be. 

All of these changes in emerging technology and processes also require us to deepen our skills and keep up with the ever-changing landscape of Cybersecurity threats.  It is fortunate that there are multiple regional and global players that are seasoned Cybersecurity professionals whose services can be employed by banks. The banks will continue to need internal teams who are trained and keep up with intelligence on the latest security trends , in addition to being aware of the ever changing threat landscape. 

While banks are heavily regulated, and many of the fintechs provide some competition, I believe that the Fintechs themselves will soon have to deal with regulations.   Start-ups and Fintects are more geared towards innovative ‘out of the box’ thinking to manage regulations, while banks are not. Banks need to begin to think like Fintechs, and to work more closely with regulators to overcome perceived obstacles. 

Human capital is another major consideration that needs to be managed.  Disruption will impact jobs and will make some jobs obsolete or no longer relevant as financial institutions adopt new technology or move towards cloud based technology.  Skills that need to be enhanced are managing partners, research, architecture, and change management processes. Employees need to think differently, since no longer will there be prescriptive measures on how things should be done.  We need employees who can think logically and laterally, with problem solving capability and are highly communicative. 

We need to move from a hierarchical paternalist management style towards a more consultative, flat hierarchy. 

The ability to adapt to the rapid pace of change is crucial, Python was non-existent as a programming language in banking 5 years ago, but it will become a skill set which is much needed for banks to move towards big data. 

Since technology continually evolves and develops, banks can no longer do what they have done traditionally which is wait till they have no choice and then to change their solutions, largely due to cost barriers.   Their traditional partners will need to also change; those costly legacy systems that sit on databases and servers, with high maintenance fees will need to evolve.  Big technology companies, like banks have tried hard to maintain their revenue lines, thinking that it will last.  Disruption has made us change and change was needed.