Introduction
Organizations all over the world are contending with the rapid pace of technological advancements. From fashion to media, agriculture to hospitality, lightning-quick changes in the digital sphere are affecting everyone.
The global financial services industry is no exception to this trend. Money matters to everyone, so it is no wonder that there is a spotlight on finance and its response to changes in technology. The winds of change are blowing hard on the finance sector, causing financial service providers to rethink their approach to business. To avoid getting swept away by these winds, legacy financial institutions should be proactive about digital developments.
Indeed, finance ought to be at the forefront of tech-centered trends if it wants to continue to satisfy its customer base and compete effectively with disruptors in the financial market. The increased digitalization of the world and the need to embrace industry-wide changes are enough motivation for the finance sector to adjust its operations to meet future requirements.
Everything is Digital Now
Technology has drastically altered the business landscape. It is no longer hemmed in by hardcopies and other traditional ways of conducting affairs. Modern organizations now operate in a system where all manner of processes are becoming increasingly automated and digitized.
The finance industry is especially interesting because its response to the wave of technological change will have knock-on effects for basically every other sector in the business landscape. In its Q1 survey to ascertain industry sentiment around blockchain and digital assets, Deloitte found that most industry leaders view digital advances as critical for the operation of their businesses.
Hard currency and payments are critical points of change in the technology realm. Payments are becoming increasingly woven into every step of the finance value chain. As cryptocurrencies become more popular, actors in financial markets are changing their attitudes towards cash and payment systems.
We are living on the cusp of a time in which crypto will be ubiquitous. The pandemic has only exacerbated this rising trend by driving us towards increasingly online financial transactions and payments that require no contact. One of the results from the Deloitte survey was that cryptocurrency would soon take the place of traditional money.
Don’t Be a Luddite
In the early 19th century, there was a labour movement by skilled artisans who were concerned about what the advent of technology in the textile industry would do to their jobs. They protested the use of machinery because they feared it would undermine their wages. Nowadays, the term ‘Luddite’ paints a picture of those who are not fond of novel technologies.
In an increasingly digital world, it would be folly to maintain a Luddite attitude to technology. The financial services sector should instead embrace technology and all it has to offer. Over 75% of those surveyed by Deloitte are sure that being lax about blockchain, and digital assets will cost them serious competitive advantages. Forward-looking businesses in the finance sector are already generating good outcomes by using robotic process automation (RPA) and enterprise resource planning (ERP). Both these operations are helping organizations to lower costs and increase efficiency.
As industry leaders, legacy financial organizations should use artificial intelligence to their advantage. Knowing this information, they should then be able to tell the rest of the industry what to expect. In this way, traditional financial companies can help the rest of the industry to make sound business decisions and help them prepare for the inevitably digital future that awaits us all.
Banks, for example, are staying on top of the trends, seizing competitive advantages wherever they can find them. They are at the forefront of filing for patents in the area of cyber assets and related technologies. Being in direct competition with all things related to crypto has made banks sensitive to the need to adapt. They are getting ahead of the impending digital takeover by embracing the power of technology.
The banks’ behaviour is a reflection of a broader trend. Companies are moving away from traditional business models and using the power of technology to create new services to address client needs. For example, robo advisors are a perfect blend of technology and financial expertise, helping the less privileged gain access to wealth management tools to better their lives. Digital payments platforms such as Google Pay, Revolut, and Stripe are examples of perfect integration of easy-to-use-commerce and technology. These new forms of technology have led to a gradual shift from traditional finance business models.
Conclusion
Undoubtedly, there are significant hurdles and obstacles to adapting fully to the digital wave. In terms of infrastructure, financial service providers are simply not where they ought to be in terms of being technically ready to weather the digital storm. This is reflected in the lack of consistent regulation surrounding the provision of cyber financial services. Security is another issue that is severely underdeveloped and therefore causing great hesitation when it comes to adapting to the new world order.
Despite these difficulties, Deloitte observed optimism concerning the future of digital assets and crypto finance amongst its survey respondents. Opportunities do indeed abound for the forward-thinking, proactive actors in the financial sector of the economy. Strategically positioning oneself with the digital changes will make the future of finance something to look forward to, instead of something to fear.