The financial services industry is at an inflection point. Not only are its customers embracing digitalisation in ever growing quantities, but new market entrants are beginning to chisel away at the sector’s traditional income streams. The risk of disintermediation is a very real one for banks and asset managers, but it is a threat that can be averted or at least mitigated provided consequential changes are made to their existing business models. Speaking at the HSBC Securities Services Leadership Forum, themed “Transforming Today for Tomorrow”, in Hong Kong, experts outlined what was needed from financial institutions if they are to remain relevant in this new tech-driven ecosystem.

Redefining workplace culture

Despite the spectacular advancements in technology, productivity levels continue to flatline as does overall workplace satisfaction, says Dr. Yves Morieux, managing director, senior partner at BCG. The reason for this, he adds, is because businesses have responded to complex challenges by becoming more complicated themselves. “Managers spend 30 per cent of their time in meetings and 40 per cent of it writing reports. People are working harder and longer but are delivering less value,” he says. Instead of layering up on byzantine management structures, Dr. Morieux believes staff wellbeing and productivity will be better enriched if companies foster a culture that actively promotes employee cooperation and collaboration.

Moreover, financial institutions should not be afraid of failure as this can act as a deterrent to innovation. Amazon is constantly experimenting and has had its share of failures. But failing, and failing fast, is a necessity for innovation and success. Learnings from experimentation and consequently some failures have ultimately helped shape and accelerate the development of some of Amazon’s most popular products, acknowledges Dean Samuels, Lead Technologist, for Amazon Web Services. “The Amazon Fire phone was one of these examples, we learned quickly from this failure and we applied what we had learned to aid in the further development of the Amazon Echo and Amazon Alexa ecosystems, which have been very successful,” continues Dean.

Finding and nurturing talent

With financial institutions increasingly competing against technology companies for talent, banks are beginning to change their recruitment practices while simultaneously putting an additional emphasis on diversity in order to thrive, says Brian Godins, regional head of securities services for Asia-Pacific at HSBC. However, retention of talent is just as important as initial recruitment. “We encourage Googlers to devote 20 per cent of their time to working on side projects. This allows staff to develop their strengths and work on initiatives which they are passionate about. It is about empowering talent and providing staff with flexibility,” comments Prudence Chow, key account manager, Google Customer Solutions, at Google.

Customer first, technology second

Irrespective of whether customers are carrying out a cross-border payment or procuring units in a mutual fund, the most important ingredient in the whole process must be its simplicity of execution. Unfortunately, the financial services industry has struggled to optimise client experiences, meaning what should be fairly straightforward transactions like cross-border payments or buying mutual funds can be inherently complex, costly and user-unfriendly. Fin-techs – especially those in mainland China – have recognised this problem.

Alipay, says Zennon Kapron, founder and director at Kapronasia, has transformed wealth management and payments by making both processes much easier, cheaper and more accessible for an increasingly digital investor base. “Alipay did not achieve this by leveraging technologies like Blockchain or AI, but rather it identified clients’ friction points and solved them,” adds Kapron. In other words, the actual needs of customers must be the key criterion driving product innovation at financial institutions and not the technology itself.

Data as a driving force

The entrance of technology companies in financial services has been enabled through the use of technology to improve service delivery to customers. One major technology group executive says comprehensive data analytics on user behaviour has allowed their company to provide customers with investment products and content which are more aligned with their requirements. Arguably, the technology companies might even know their users better than the users know themselves. The executive added that in some cases, users claim they have a high risk tolerance but it can also be seen from their records that they have sold a product when the market drops by five percent or perhaps logged into the app multiple times during periods of volatility.

Planning for the future

While innovation is critical to the future success and longevity of financial services, product development cannot just be technology led but should centre around the needs of the underlying clients. In addition, financial institutions need to enact cultural changes, creating an organisational framework that rewards employee cooperation and engagement, and does not penalise people unduly when innovation programmes do not go exactly as planned.


Disclosure and disclaimer

More, collapsed
Network Management in 2025
The major developments that will transform network management
Join the conversation?

Join our Linkedin group to get an unparalleled view of macro and microeconomic events and trends from a bank that is a leader in both developed and emerging markets.