Finance Monthly March 2020 Edition

However, the realisation of a changing world also allows rethinking business models in financial services, as the boundaries between financial services and other, adjacent industries, become less pronounced – think of the impact of self-driving cars on insurance. As banks and insurers are more closely integrated into the surrounding industries, customers can have a more seamless experience – think of microlending at the point of sale with just a swipe. This gives rise to platforms centred on customer needs, and financial services providers are natural candidates to organise such platforms due to the overarching nature of the services they offer, and the broad understanding they have of the economies and customers they serve (even if the latter is not apparent today). The change of mindset in the board rooms and on executive floors of financial services players often starts with something as simple as an inspirational experience innovation in other places first-hand. This doesn’t have to be Silicon Valley as there is enough tangible, down-to-earth innovation and transformation going on elsewhere. Organisations then have to go through honest stock-taking of where they are - they have to understand what their assets are (tangible and intangible - incl., relationships, knowledge, etc. - idea of an asset repository) and where their liabilities are (financial and non-financial such as a legacy core system that doesn’t allow for change). On this basis, they can then determine the strategy going forward, which should integrate their existing business and any new businesses - it really is more of a bank strategy rather than a bank’s digital strategy. The important element here is to make the strategy process tangible through an approach that aims to create minimum viable products that allow for quick testing with customers followed by the according adjustments in iterations, as well as the inclusion of partners in the process. There are sweeping changes in banking which are changing the landscape and most of these innovations are coming from outside in. The ubiquity of the internet has produced warehouse/basement bankers who are disrupting without any legacy burdens. The regulators are sometimes sleeping through the change and in odd times struggling to catch up. For the sake of a brighter future, we hope everyone wakes up to this new reality. through M&A and consolidation. What we have seen work in Europe can also work in the Middle East if the framework conditions are right. What do you think are the best solutions for financial institutions to address these challenges and navigate digitalisation effectively? First and foremost, the sector needs to accept that the changes brought about by digitalisation are real, fundamental and that they’re here to last. Once this realisation arrives in board rooms and executive management floors, the real work of transformation and change management starts. Addressing digitalisation is as much a question of creating the right mindset as it is of implementing new technologies. To make a very simple and straight-forward example, certain Silicon Valley companies have KPIs on business model failures. They measure managers successes and failures. Too many successes and not enough failures mean that the managers are not pushing far enough. This is an interesting mentality at the very edge of management and meant to create an innovative culture by design. Could Middle Eastern financial institutions adopt a model of this nature? “The sector needs to accept that the changes brought about by digitalisation are real, fundamental and that they’re here to last. “ FINANCIAL INNOVATION & FINTECH - DIGITALISATION 45 www.finance-monthly.com