AI, blockchain, chatbot, digital identity, etc. – there is enough emerging technology in financial services to fill an entire book of the alphabet. And it is difficult not to be overwhelmed by the visions of bionic men, self-executed intelligent contracts and virtual assistants who anticipate our every need. Investing in emerging technology is one of the main ways in which financial services companies hope to drive innovation: about 26% of executives of financial firms, whose priority is to improve the innovation capacity of their companies, aims to do so by investing in emerging technologies. So, how to stay above all, where should you place your bets, and how can you offer customers and business value with technology? To answer these questions, Forrester has brought together internal and external experts at his 2018 financial services summit. Do not worry if you can not join us in London – here are some of the main results:
The past often holds the keys to the future. Forrester Vice President and Research Director Benjamin Ensor kicked off the day by examining some of the innovations introduced by the British Navy Board, including the use of citrus fruits to combat scurvy. Before thinking that we are all hopelessly sentimental, the event took place in the Navy Board Rooms of Somerset House or, as Benjamin said, the “technological department of the largest industrial organization in the world”. The 19th century has a lot to teach us about innovation, including the need to focus on results and develop talent by promoting merit, as well as being open to foreign ideas and never being pleased.
You no longer have the monopoly of emerging technology. We like to think of technology as a prerogative of geeks (think of the Big Bang or Silicon Valley theory), however, emerging technology is now a table topic. As Tim Hynes, CIO of Allied Irish Banks (AIB) said, members of the board will read articles on the media about artificial intelligence or blockchain and suddenly demand a response from you. If you can show that you are looking at this space for the impact on your business, this will give them confidence (probably enough to avoid being bypassed while bringing consultants to build something you have refused).
A balanced portfolio is a must. So, how to stay one step ahead of your board (and your competitors)? Tim stressed the importance of monitoring innovations across three horizons. Because? Because “we always overestimate what we can do in one or two years and underestimate what we can do in three or five years,” he noted. If you distribute the AI within three years, you will have to start thinking now about practical aspects such as missing skills. And to avoid being disturbed, you must also have a vision of what could happen in five or ten years (horizon 3).
This is not a single technology but a skillful mixture. Fintech is subject to fashions; one year is blockchain, the next is AI. But innovation often comes from the combination of technologies and methods. For example, in my presentation I highlighted how the orchestration of customer outcomes, in which we design and create experiences that correspond to the client’s intent and draw on the context of the shared client, becomes possible thanks to progress in personal identity and management data, analysis platforms, artificial intelligence and real-time management of interactions.
The digital experience will soon cross the limits of devices and apps as it matures a number of other technologies.
Innovation must follow the company strategy. You need to develop a clear vision of how emerging technologies will help your business. John Berry, senior advisor at Efma, said banks are mainly exploring the AI for customer service while insurers are focusing on the back office. Interestingly, the person who leads the AI’s efforts is more likely to be in charge of innovation. To ensure that innovation is not an ivory tower, it is necessary to create bridges within the organization. This difficult task was entrusted to Roberto Ferrari in his new role as chief digital and innovation officer at the Italian bank Mediobanca. Roberto’s useful tips included starting with an internal road show to connect and listen to colleagues; to articulate the advantages of innovation (including the value of the internal customer!) in terms of cost reduction, new revenues and new activities that will affect the income statement and the price of the shares; and get a quick victory (in his case, a project that involves the automation of robotic processes in the Mediobanca Group) and move on to a second quick victory.
Winning does not concern the identification of disruptive technologies but the construction of Agile bases. Tim Hynes’s observation that it took 70 years from when vitamin C proved useful to combat scurvy was discovered and when citrus fruits became present on most ships it was a bit depressing. We’re probably a little faster now, but we’ll have to be more adaptable. Diego Lo Giudice and David Wheable of Forrester have shown how to manage this change from optimization and sustainability, with the complexity that passes from the construction side to the execution phase and new responsibilities such as the intermediation of services (sewing of customer experiences from microservices) and new roles as IA data and engineers emerge. And if you were not fully convinced of the benefits of combining Agile with DevOps, the Diego slide will win you over: