Digital Disruption in Financial Services

Everyone’s talking about digital disruption in financial services, but one of the most common questions we still get from our students and clients today is:

“What exactly is digital disruption, and what are the financial institutions doing about it?”

Digital disruption is the convergence of multiple drivers transforming the financial services industry, including advances in technology, changing customers, new competitors and evolving business models.

The most important, disruptive advances in technology impacting the industry include:

  • Sophisticated analytics
  • Cognitive computing
  • Big data
  • Mobile technology
  • Cloud computing
  • Distributed ledgers and blockchain
  • Robotic process automation
  • Digital assistants and chatbots
  • Biometrics
  • Application programming interfaces (APIs)

This digital disruption is creating challenges for financial institutions as they struggle to meet client expectations and respond to new competitors (including Ant Financial, Stripe, Paytm and other fintech firms).

Opportunities for Financial Institutions

Despite the challenges, digital disruption also creates significant opportunities for financial institutions to transform their own businesses by leveraging these advances in technology. For example, financial institutions are:

  • Investing in business intelligence, predictive modeling, data visualization and machine learning to improve risk, fraud, marketing and customer analytics
  • Utilizing robotic process automation to automate manually intensive business processes and reduce costs
  • Leveraging big data management tools, high-performance computing resources, artificial intelligence and advanced mathematics to support quantitative tradings as well as research and analysis
  • Offering robo-advisory services to retain and attract clients
  • Exploring blockchain applications related to trade finance, trade settlement, asset securitization and collateral management
  • Expanding the functionality on mobile apps to support customers, treasury clients, commercial loan officers and investment bankers
  • Developing APIs to support multiple payment methods

What are your thoughts ?

Please share your thoughts on digital disruption and the challenges (and opportunities) for financial institutions.  I’d love to hear from you!

About the Author

David Tompkins is a founding partner at Performance Solutions International (PSI) and has spent over 30 years providing training and consulting services for the financial services, technology and health care industries. LinkedIn

Performance Solutions International (PSI)

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