A sea change is underway.
The financial services industry is changing rapidly—driven in no small part by the rise of agile, innovative fintech startups. They’re able to quickly take advantage of disruptive technologies, and deliver the exciting new user experiences that are fast becoming the norm.
At the same time, your own business needs are evolving. Traditional banks are required to report more accurately, and comply with demanding new regulations—all while maintaining transparency with shareholders.
Digital innovation: friend and foe?
With leadership that champions digital innovation and nurtures a collaborative culture, the very thing that threatens your business—digital innovation—could quickly become a major opportunity for growth, additional revenue, and market relevance.
Explore the causes behind the rapid change across financial services, examine the new strategic opportunities this change has created, and assess how those opportunities can be seized.
Marco Antonio Cavallo, Advisor, CIO.com
The disruption of traditional banking grows stronger worldwide, and banks must reinvent their services to meet today’s device-obsessed consumer expectations.
Antony Jenkins, Former Chief Executive of Barclays
It [modernising legacy systems] is immensely complex. Legacy systems from different generations are layered and often heavily intertwined.
Financial Times, “New-Generation UK Banks Challenge with Technology"
Unlike traditional high street banking services, [digital-only banks] are offering customers the ability to manage their own money with an app. They’re built with modern technology that allows them to plug into external services, such as lending, investing, or shopping from other providers and rival banks.
Netflix used its API to extend its service to more than 200 different devices—televisions, games consoles, smartphones, tablets, and more—in less than two years.
“How Banks Can Create Value from the Rise of the Open API Economy in Financial Services,” CGI Group
Bank leaders of the future will have a clear focus on their end customers and markets, and will collaborate with other organisations to accelerate their market position—either through increased use of digital technology platforms, and/or digital insight that supports their specific business strategies.
Gains from the API economy.
The next two sections of this digibook will explore how your organisation can use the API economy to benefit in both the short and long term.
- Short term: Collaborative innovation will allow you to exploit new revenue streams through emerging fintech models.
- Long term: Developing a new cloud banking platform will give you the opportunity to evolve into a trusted, customer-centric organisation—constantly innovating and providing greater customer experiences.
Monetising your intellectual property.
Rather than hiding it away from the world, your IP could become the path to various new revenue streams. By allowing third-party access to your systems, you can immediately benefit from new fintech without having to invest time, budget, or people in developing it yourself.
Banks can increase net profits up to 45 percent by adopting newer digital fintech solutions.
What can fintechs provide traditional financial institutions?
- Digital innovation now: Collaboration can happen immediately.
- Agility: Fintechs provide the chance to capitalise on and monetise new trends with greater speed and flexibility.
- New audiences: As more customers move to fintech solutions, collaboration will allow financial institutions to monetise these customers.
What can traditional banks provide fintechs?
- Scale: Fintechs usually start small and scale up—sometimes to global proportions. Their business models support scalability, but only up to a point. When both share a common technology platform and business strategy, financial institutions have the potential to help fintechs reach more customers.
- Cost-effectiveness: Fintechs need access to a complete platform with minimal up-front investment. With the right cloud platform, financial institutions can deliver this.
- Enterprise requirements: Compliance and security are essential to fintechs, but it can be difficult to innovate while meeting ever-changing regulatory requirements. By starting with a common, proven cloud platform, fintechs can get to market even faster—and more securely.
- Credibility: Dealing with customers’ money requires trust. Having the backing of a large financial institution will lend fintechs greater credibility, and help to attract more customers.
Success story: Rabobank.
With the EU GDPR regulation looming, Rabobank wanted an easy-to-use API management solution with an integrated security layer. With Oracle API Platform—using Oracle API Platform Cloud Service and Oracle Apiary—Rabobank can now deploy gateways in hours rather than weeks, resulting in a 90 percent reduction in time to deployment. Further, they’re now compliant in advance of the GDPR deadline.
Amber Leigh Turner, the Next Web
Banks that transition to be a platform more than a service provider stand the greater chance of staying viable and successful.
What can you do with a cloud platform?
- Weather the storm: When the only constant is change, an agile cloud platform can help you react quickly and efficiently to transformation, and prevent you from getting left behind.
- Lead the way: Business is not just about survival. And with your new-found agility, you’ll be able to try new things and adopt a fail-fast culture of innovation—making use of new technology, creating new revenues streams, and getting ahead of the competition.
- Win customers: When you’re leading the way in innovation, providing new cross-channel, personalised customer experiences, and passing on cost efficiencies, you’ll quickly gain a competitive edge.
- Comply with confidence: As technology rapidly changes, so too will the rules and regulations that manage it. By building your platform with a trusted cloud partner, you’ll be able to stay on top of incoming regulations with greater ease.
What does this look like?
So what might your platform for innovation look like? The following chart shows how banks can innovate, get to market more quickly, and deliver the consumer-centric experiences your customers demand.
Where Do You Start with Financial Services?
Deploy all or strategic components
A culture of change.
To achieve this, your finance leaders must spearhead a shift in internal thinking toward a culture of constant change. Recognise the need for innovation, and enable it. Employees should feel encouraged to innovate—adapting to market trends and moving quickly to implement change.
In other words, you’ll want to create a startup mentality. One that can identify and take advantage of new opportunities while using the strength of your platform as a complete, proven back-end solution to drive you to market with unbeatable speed.
Success story: Westpac Banking.
Jeff Jacobs, Chief Technology Officer, Westpac Group
We are responding to the changing face of banking by significantly enhancing our branch and digital offering. Providing more flexible and agile branches and continuing to innovate in online and mobile are key to the success of our strategy. Oracle’s platform will help us provide a single source of customer truth that delivers a consistent and high-quality experience.
Big data and real-time analytics.
With all of these connected devices, machines, and components—plus the vast swaths of data from financial transactions—traditional banks have huge opportunities to discover insights that could change the face of banking in their favour.
Anju Patwardhan, Chief Innovation Officer, Standard Chartered
By using data science to collect and analyse big data, banks can improve, or reinvent, nearly every aspect of banking. Data science can enable hypertargeted marketing, optimised transaction processing, personalised wealth management advice, and more—the potential is endless.
Artificial intelligence (AI).
The vast amounts of data held by banks is now being used to predict activities and improve results. AI is proactively analysing that data and solving business problems in real time. Systems are becoming self-learning, and chatbots are improving quality responses with less effort. Lead times are being reduced, quality is being improved, and efficiencies are increasing.
It’s the technology that underpins Bitcoin, but it’s having a profound effect on all transactions—disrupting the entire financial services industry. The next stage will be to leverage blockchain to improve transparency, IP protection, collaboration, compliance, payment, and execution throughout the supply chain.
Michael Hickins, Wall Street Journal
Blockchain promises to increase transactional trust and reduce fraud, as every participant has a bird’s-eye view into every step of that chain.
What comes next?
In this rapidly changing world, no one really knows. After all, who could have predicted the rise of technologies like AI, blockchain, and IoT? But that’s essentially the point. We can’t predict with absolute certainty what’s next, so you must build a platform that will enable you to react rapidly to future changes. You must adopt a culture of change and innovation, capable of attracting and retaining the brightest talent. And you must embrace disruptive new technologies as they appear, allowing you to develop and capitalise on new revenue streams. With Oracle’s help, a powerful cloud platform will become the beating heart of your organisational transformation.
The Components of a Complete Financial Services Cloud Platform
Oracle CX Cloud Suite is an integrated set of applications that span the entire customer lifecycle from marketing to sales, and commerce to service.
Use a single global human resources solution that aligns common global HR processes, supports local compliance needs across multiple countries, and engages your workforce.
Streamline your enterprise business processes with Enterprise Resource Planning (ERP) Cloud. With ERP Cloud Financials, Procurement, Project Portfolio Management and more, you can increase productivity, lower costs, improve controls and bring greater insight to the business.
Oracle Risk Management Cloud
Oracle Risk Management Cloud, you can confidently manage risk and have systems of control to meet compliance requirements imposed by external bodies; BASEL II and required internally. It can quickly detect potential process and control issues, and provide line-of-business leaders with strategic risk insights.
Big Data and Analytics Cloud
Oracle Analytics Cloud delivers business analytics for traditional data and big data across the entire enterprise.