Frontiers in Finance: Disruption on the Transformation Journey

in Financial Services, 31.01.2018

How well are senior leaders dealing with disruption? Executives face the data revolution and new technologies, the demand for greater customer centricity, and growing constraints imposed by governments and regulators. The issues are far reaching and the solutions require a strategic approach.

In its response to the global financial crisis, the financial services industry has shown that even the largest financial institutions can change and adapt very significantly. Navigating the next set of challenges will not be straightforward: both the scale and pace of the transformation we are experiencing are unprecedented.

The key issue is what will make a real difference to clients and add value to the customer experience. The ability of new technologies to allow financial services businesses to operate better, faster and more effectively is unquestionable – from harnessing the power for the cloud to transformation usability, experience and satisfaction to cement customer loyalty.

Our latest edition of Frontiers in Finance covers what senior leaders are doing to deal with disruption and where they are in their transformational journey. We illuminate both the nature of the turbulence in which our clients find themselves and explore strategies for successful responses. Our articles highlight a variety of topics principally covering the challenges of geopolitical & regulatory changes, disruption with FinTech & automation, and the race to focus on the customer experience. Here are a few highlights:

Geopolitical and Regulatory Changes

A flurry of geopolitical change and political upheaval is raising fundamental questions about the potential impact on banking industry regulation. The shifting and highly unpredictable environment is creating uncertainty among global banks that are scrambling to identify what the future might hold on the regulatory front.

We already see the impact of this in the Swiss banking sector with the unknown outcome of Brexit. As deliberations on a transition period come to a conclusion in the coming months, Swiss banks have started to initiate planning for Brexit transition scenarios. Regulators are also becoming ever more granular in their scrutiny of the asset management sector, and are extending regulation to products that have previously been unregulated.

Yet regulation is not only impacting the Swiss banks and asset managers, but also the Swiss insurance market. There is much talk of the huge changes IFRS 17 will bring to actuarial and accounting functions. In this version of Frontiers in Finance we also explore the profound business impacts that IFRS 17 will bring: product design and pricing will attract more attention, changes to profit emergence will impact on how capital is managed, and key performance indicators will need reconsideration. Those thinking strategically about the business implications of IFRS 17 today should be the ones best placed to navigate the business impacts of the transition to the new standard in 2021. There is still time to turn IFRS 17 business issues into competitive advantage. The key is to be proactive. Here we see the question of technological transformation take center stage on the agenda for Swiss insurers. Such changes can hardly be achieved without the investment in the right technological solutions.

FinTech and Automation

The banking industry must similarly get to grips with a host of operating changes with technology. The CIO has a pivotal role to play. As FinTech startups and disruptive new technologies put banking at the epicenter of the digital revolution, CIOs must balance the adoption of new technologies with not jeopardizing existing systems on which the bank relies.

At the same time, there is an increasing pressure in the Swiss banking market to demonstrate tangible saving results with automation. But automation won`t necessarily be the silver bullet for finance. We expect CFOs to focus on combining automation with traditional levers. Yes, new technologies such as robotics, machine learning, and AI are here to stay. But our survey shows that the banks who achieve the greatest efficiency gains have made sustainable “lifestyle changes” to their finance operations rather than basic “liquid diets” to achieve short-term cost reductions. This encompasses not only technology investments and automation but also lean process design, workload balancing, report consolidation, and organizational restructuring, among other tactics.

The Customer Experience

Alongside these challenges come the next battleground for success: The customer experience. As asset managers realize that delivering customer experience excellence will drive future growth, they seek strategies to become customer centric. The industry is shifting away from ‘selling products’ and towards ‘providing solutions’; away from ‘opaque fees and structures’ and towards ‘transparency and value’. Success now and in the future hinges on how customer experience is delivered, perceived and shared.

This is equally important in the Swiss market as we see many Swiss banks and insurers launching their own customer experience transformation initiatives. Forward-looking players already understand that outstanding customer experience excellence delivers real financial and commercial benefits.

Conclusion

The challenges are immense, but so are the opportunities. We hope you find this edition of Frontiers in Finance thought provoking as you seek to transform your business to provide even greater, more sustainable value to your stakeholders.

 

 

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