Financial sector leaders feel more positive than peers in other industries (89%) about tech change within their organisations, according to Fujitsu’s Tech in a Transforming Britain report. Despite half (50%) saying banks will not exist in their current form in a decade, an overwhelming 95% believe technology is the key to driving their organisation forward.
Seven-in-10 financial sector leaders believe technology will enable them to overcome many of the socioeconomic issues they are facing today. This is an idea that their peers agree with; over a third (37%) of business leaders are banking on financial services to innovate and drive change in the UK, while almost half of business leaders (45%) believe banks are changing the most in the UK today.
It’s a change both consumers and leaders in the industry are keen to see continue. Consumers want to see Artificial Intelligence (13%), biometrics (15%) and a 5G mobile network (10%) implemented to improve their experience in banking over the coming year. With banking leaders looking to Artificial Intelligence (42%), biometrics (35%) and robotics (32%) in the same period it is clear that there is alignment.
“Financial services is clearly seen by the public as a sector that has and continues to be transformed by technology,” said Mike Foster, Managing Director, Financial Services Sector, Fujitsu. “This perception is fully justified. The majority of financial services organisations have not only embraced technology, but are seeing benefits with workforce productivity, operational efficiency and in driving business growth. As further transformation of the sector looks inevitable – for example through the introduction of new pieces of regulation such as PSD2 and rise of blockchain technology – it is vital that organisations consider how new technologies can shape their futures and ensure they are ready to compete in a diverse marketplace.”
Improving employee productivity (47%), operational efficiency (38%) and fuelling business growth (37%) were the key internal benefits financial leaders attribute to technology today.
There are challenges ahead, however. While the financial services sector is aware of the benefits of technology, they have concerns. More than half of the sector’s leaders (55%) say cybersecurity is their biggest operational challenge today – higher than the average across industries (48%). Access to talent in a new digital world is also an issue; 56% say a lack of skilled employees has the potential to impact growth and revenue most within their business.
Foster continued: “Banks have led the digital charge for many years, a fact that is recognised both amongst their peers and UK consumers. Many assume this means there is nothing left for them to implement, yet, with almost half saying their competitors are doing more to drive the UK forward, this is clearly not the case. While there are a wealth of digital tools and services available for consumers, there is a need for banks to collaborate to begin to address their digital future. Whether that’s coming together to address cybersecurity risks, or working together to address the skills gap, the focus must now be on the internal demands to ensure success.”
(Source: Fujitsu)
Below Ravi Krishnamoorthi, Sr. Vice President & Head of Business and Application Services at Fujitsu in EMEIA, shares his predictions on the digitally disrupted world including the importance of partnerships in the business ecosystem, enterprise wearables and blockchain – not just for cryptocurrencies.
Without the right ecosystem businesses will fall at the first hurdle
We all understand how powerful technology is, from the omnipresence of Google to digital disrupters Airbnb and Deliveroo. Our recent research found that over three quarters of businesses (86%) are planning for the impact of technology beyond the next 12 months. Businesses will undoubtedly find their ecosystem widen as new, technology-driven concepts are applied to every single market in the world. And as a result, leaders will be forced to access a wider landscape and innovate alongside like-minded organizations.
Businesses must now take a bold approach to the challenges faced by working with entrepreneurs, not against them. Building relationships with digitally inherent businesses will help uncover bold, unique ideas and form entirely new services. This method will not only create a culture of inclusiveness, but breed an entirely new mentality that lends itself to success.
Businesses will begin to invest in enterprise wearables now more than ever
Digital wearables, such as smartwatches, healthcare devices and fitness trackers, were initially introduced as consumer nice-to-haves. Customers flocked to the technologies to keep track of daily activity and communicate. Yet, the move from consumer gadgets to business tools continues to grow; ABI’s research found that enterprise wearables in businesses were in higher demand over the consumer market.
Now businesses are taking the hardware, integrating it with powerful monitoring and management software and ultimately creating entirely new business processes. They are also buying in different ways – they want an end to end managed service, not just the raw tech. It’s no longer about giving someone a vital band or head mount, but building a service that alerts the business of any issues, re-routes messages back to a central hub and enables a reaction. That reaction can be anything from preventing harm to a worker that has fallen asleep in a dangerous location to tracking the well-being of your staff to ensure they aren’t overworked.
Enterprise wearables will come of age in 2018 and businesses’ workforce will be the ones to profit most.
Blockchain – businesses need to look beyond the hype in financial industries
To understand blockchain we must first strip it down to a very basic understanding. It’s simply a standardized way of understanding the change of ownership. Unfortunately, there is still a lot of hype around it as everyone discusses digital currencies. It’s true that blockchain biggest success to date has been in virtual currencies, but it’s highly probable that it will be even more successful outside of financial services.
Complex tasks such as contracting in legal practices and tracking retailers’ supply chain from farm to supermarket could be simplified by a blockchain-style ledger. The security benefits would be vast and a universal application could see the tech turn its trend status into a tangible business benefit. As Bill Gates famously said:
“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”
Blockchain is most likely to be a slow burn but its potential impact over 2018 and beyond could be huge.
Figures released by UK Finance find the number of debit and credit card transactions grew by 12% in the UK in the year to the end of June, the highest annual rate since 2008. The value of spending also rose, accelerating to 7.2%.
Lenders are currently facing the pending challenge of upping their game after The Bank of England's Prudential Regulation Authority (PRA) highlighted the need to address lending concerns.
Ian Bradbury, Chief Technology Officer, Financial Services Business at Fujitsu UK and Ireland, told Finance Monthly:
“With the use of contactless payment cards soaring by over 140% in the past year alone, the news that UK credit and debit card spending is growing at its fastest rate in nine years comes as no surprise. We expect contactless payments to become an increasingly important feature in the British payments landscape. Making up around a third of all plastic card transactions – up from around 10% just a couple of years ago – the convenience and ease of contactless payment means that such transactions are continuing to gain traction with the public. Not only this, the high-growth adoption of contactless payments underlines the fact that consumers and retailers choose to adopt solutions that are secure, quick and easy to use, as well as ubiquitous.
Contactless payments are not only easier to use than Chip and Pin, they are in many ways more practical than small change and small notes. The significant parallel growth in debit card transactions also suggests that this is not growth just fuelled by debt and easy credit – much of this increase will be a result of contactless payments being made purely due to ease. What’s more, contactless payments have the added value of fuelling other payment solutions such as Apple and Google pay and other wearable technology – which can’t be done as easily with Chip and Pin.
Finally, the success of contactless payments demonstrates that consumers are quick to adopt new payments solutions that focus heavily on improving the consumer experience. However, because consumer experience can cover many aspects including convenience, security, speed and ubiquity, it’s vital that providers put in place ways to improve the experience over current solutions. If future payment solutions do not address all of these areas – which are fast-becoming a customer expectation – then they are unlikely to be successful.”
September marks the 10th anniversary of the contactless card, and in the last decade we’ve seen its use soar, particularly in recent years. Barclaycard believes its use will push a further 300% in the next four years.
Finance Monthly has heard from Ian Bradbury, CTO for Financial Services at Fujitsu UK and Ireland, who shares his insights on how contactless has developed over the past ten years, and where he expects the payments landscape to go next.
It is hard to believe that contactless cards have now been around for a decade, as we have only in recent years seen them receive significant uptake with consumers. What was once seen as ‘scary’ and ‘unsafe’ to use, is now – thanks to its ease and education – resonating and growing in popularity with today’s consumers and now responsible for a third of all card transactions.
We expect this adoption of contactless payments to only grow, and become an increasingly important feature in the British payments landscape. Ultimately, both consumers and retailers are choosing to adopt solutions that are secure, quick and easy to use, as well as ubiquitous.
Not only are contactless payments quicker and easier to use than Chip and Pin, they are in a variety of ways more practical than small change and notes. The notable corresponding growth in debit card transactions also implies that this is not just growth fuelled by debt and easy credit – much of this increase will be a result of contactless payments being made purely due to ease. Moreover, contactless payments have the added value of fuelling other payment solutions such as Apple and Android pay and other wearable technology, which isn’t so easily done with Chip and Pin.
The success of contactless payments highlights consumers today are quick to adopt new payments solutions that focus on improving their experience. That said, because consumer experience can cover many aspects including convenience, security, speed and ubiquity, it’s essential that providers put in place ways to improve the experience over current solutions. If future payment solutions do not address all of these areas – which are fast-becoming an everyday expectation from consumers – then they are unlikely to be successful.
