Parijat Banerjee is Global Business Head for the Banking, Financial Services, and Insurance (BFSI) sector at LatentView Analytics.
Like a wheel, the modern connected financial ecosystem is relentlessly rolling forward and innovating daily. At its hub are traditional financial institutions connected by digital and data “spokes” that venture outward to join with a collection of fintech companies. They enable several different ways for today’s consumers to pay, borrow and invest. Fueled by changes to the way we work, collaborate and purchase post-pandemic, digital platforms have reached mass adoption with 88% of people using an app to provide convenience in their financial lives.
This widespread adoption is made possible using APIs (application programming interfaces, or a software intermediary that allows two applications to talk to each other) that allow data about customer behavior and preferences to flow freely and securely between fintech entities and their legacy financial counterparts. But the industry—which has been historically slow to capitalize on evolving technology—has an opportunity to tap into the wealth of data flowing across the ecosystem or risk settling back into pre-pandemic habits. Without a concerted effort from legacy institutions and their tech counterparts to drive innovation forward, the industry at large could fail to keep pace with evolving consumer expectations.
Today’s chief experience officers (CXOs) are envisioning a single source of truth for their data needs—one that visualizes information from sources across the organization to enable seamless decision-making. But such visualization is difficult when the data is trapped in disparate, on-premise centers. Moving data to the cloud is a common practice as many financial institutions are embracing digital transformation. The enterprises—and the larger connected network—can start leveraging this.
Our Connected Future
When we tap into and utilize the data at our disposal, several advancements become possible. Leaders should be apprised of our conceivable digital future and begin to prepare their teams for such innovation. Here are three factors to think about as we move into a wholly connected financial future:
• Governing The Data Explosion: Data is growing exponentially every minute. For us to leverage a truly efficient and connected ecosystem, we need to be able to put our faith in the quality, accuracy and consistency of data to objectively point us in the right direction. The challenge is the proliferation of structured and unstructured data created in a loop. Individuals, businesses and governments are generating an astronomical amount of data that require strings of zeros to describe its sheer volume. To exercise control for meaningful insights, there is an immediate need to establish streamlined processes for organizations at the enterprise level to help establish guardrails to govern the data.
• Bolstering The Experience Economy: In this age of the consumer, are we able to harness the power of analytics to turn insights into actions and create a strategy to help bolster growth? More and more, consumers in their quest for ultimate convenience are demanding that their data work in perfect synchrony with their day-to-day practices. To achieve a more connected future, we must create the infrastructure that clues us into predictable behaviors, so we can form solutions for this experience economy.
• Keeping Pace With Innovation: The pandemic was a dress rehearsal for the kind of action needed to push the boundaries of innovation across financial services. The enterprise was resilient and adapted to meet the immediate needs of its customers, a trend likely to continue. Horizontals like payments cut across industries and devices, as they are significantly disrupted by customer-centric fintech companies to meet customer expectations. These ongoing transformations from the legacy way of work to cutting-edge could place value-added services on a trajectory for tremendous evolution.
The connected financial ecosystem has seen extensive innovation over the last several years, but there is a rich store of data enabled by APIs that the industry is still not taking advantage of. Embracing the way that the rise of e-commerce and the gig economy are fueling new innovations and digital-first business models is the way ahead for the industry.
Innovation can be fostered when legacy players introduce paradigm changes in a few ways. First, a platform that functions as a digital destination can be created that combines lifestyle and financial services for consumers and merchants with embedded payment capabilities. They can also embrace how the rise of e-commerce and the gig economy are fueling new innovations and digital-first business models. Lastly, they can enable digital tools like wallets to sit outside traditional banks for users to transfer funds and make purchases using options such as BNPL.
In our quest for convenience, it’s critical that we start to pay attention to this data. As Simone Weil said, “Attention is the purest and rarest form of generosity,” and it’s one of the best ways for achieving a more interconnected system.