The digital age has been crashing upon the shores of finance at an accelerating rate, yet so far incumbents have been relatively slow to adapt. With the advent of a global pandemic and the worsening climate crisis, however, financial institutions are finally picking up the mantle and developing a modern financial ecosystem focused primarily on innovation, green finance, and the needs of stakeholders.
During the “Digital Transformation: The Next Era of Fintech” panel held at the Fintech Inn conference, which will take place on 21-22 October, panelists will be discussing the direction the industry is currently taking and what people can expect to see in the near future.
Liudas Kanapienis, co-founder and CEO of the cutting-edge KYC and compliance solutions company Ondato, emphasises that what we’re seeing today is not simply the digitisation of already existing services, but a more comprehensive digital transformation.
“Before the pandemic, many of the [digitisation] processes were taking place simply for the sake of innovation. Everyone was looking to innovate, often without knowing what they wanted to innovate exactly. However, when the pandemic showed the actual pain points, transformative processes became necessary, even just to maintain access to services and develop efficient underlying procedures,” Mr. Kanapienis says.
The shake-up caused by the pandemic has left banks and other financial institutions with little choice but to start developing solutions that meet the rapidly changing preferences of consumers. More than that, incumbents were forced to recognise the necessity of changing how they function internally as organisations.
Whereas previously banks often regarded digital assets like mobile applications as a bonus or a luxury, now they’ve become absolutely essential.
“Customer onboarding must be digitised and done remotely, and processes have to be streamlined and convenient both for the consumer and the bank to ensure compliance with regulations and to improve their internal processes,” says Anton Zujev, Head of Business Development and Sales at Forbis.
The rapidity of the changes required at this moment is driving traditionally risk-averse incumbents to shift from in-house development to procuring new functionalities. This is done through partnerships with nimble, cloud-based, and much less regulated fintechs, which leads to different industries converging. This, however, comes with its own set of problems:
“Often I hear from large incumbent institutions regarding the great fintechs they are meeting with fantastic ideas, but they just don’t work within the regulatory environment and won’t work at scale. Making those things work together is a challenge for both sides,” states Jennifer Reynolds, CEO of Toronto Finance International.
Another looming challenge faced by financial institutions is the growing environmental awareness of its customer base, and the readily apparent need to implement rapid, large-scale changes necessary for building a sustainable economy.
“This is not only in terms of meeting climate goals, but also in terms of thinking about stakeholders and the long-term sustainability of the sector, and we’re already seeing billions of dollars being invested by FIs into sustainable financial activity,” Ms. Reynolds explains.
Needless to say, machine learning (and AI more generally), biometrics, and open data also play a key part in the on-going transformation, but no less important are the efforts to foster an organisational culture able to take advantage of internal and external innovation, which necessitates taking risks and not being afraid of failure.
“We need to see more investment in innovation, and we need to see banks be a lot bolder than they are today. And that’s hard because as a bank you’re taught not to take risks. It’s a huge change in culture and environment,” states Siri Børsum, Global VP Finance Vertical Eco-Development & Partnerships at Huawei.
However, digital transformation of incumbents is more concerned with step-by-step shifts rather than an instant, fundamental change, notes Jarosław Sarwa, the panel’s moderator and Community Partner at FinTech Connector.
“Right now, it is more about gradually moving forward instead of disrupting all aspects of business at once. ‘Disruption’ is and will continue to be a catchy fintech buzzword, but certain maturity is setting into the innovation market,” Mr. Sarwa says.
Join this and other discussions on the hottest fintech trends and challenges during the virtual Fintech Inn 2021 conference. Held on 21-22 October, Fintech Inn 2021 will bring together 250+ enterprises and start-ups, as well as 1000+ investors, policymakers, entrepreneurs and technology leaders from all over the world to exchange knowledge and discuss topics from green finance to startup media. You can get your free ticket to one of the largest industry events now on myOnvent platform.