Embracing disruption: Setting the pace in an increasingly open marketplace

People visiting the interactive disruption room at the European Banking Transformation and M&A Conference we hosted in March had a fascinating opportunity to see and feel the future of banking first-hand.

Among the emerging technologies on show were artificial intelligence-driven voice assistants. Voice tech is not only set to transform how banks communicate with their customers, but also offers an opportunity to embed themselves in their clients’ lives in ways that have never been possible before. While making dinner or driving into work, for example, the voice assistant could update you on your spending patterns or performance of your asset portfolio, along with offering personal recommendations on how to make your money go further or investment values grow.

If we add all the other immersive, hyperconnected and continually learning technologies being showcased in our disruption room, it’s clear that banking isn’t going to look like banking anymore. The customer needs will be the same – a loan or an investment, for example. But their expectations in areas ranging from experience to product personalisation are going to be very different. And while the full impact might seem like light years away, the capabilities within the disruption room are either being live trialled or have already been rolled out into the market.

Seeing is believing

Are established banks moving quickly enough to respond? Are they at risk of being blindsided and competitively marginalised by disruption? It’s certainly surprising that less than 30% of banking and capital markets organisations in PwC’s recent CEO survey highlighted the speed of tech change as a threat to their business model. Yet, as our conference showed, the more bankers interact with and understand the potential of disruptive tech, the more they recognise the implications and how much they need to do to keep pace.

More than 80% of participants visiting the disruption room believe that voice recognition will become the norm in personal and working life. Nearly three-quarters believe that it will transform financial intelligence and hence commoditise retail banking.

Similarly, more than 80% believe that virtual reality and the use of data mining will influence their professional and personal lives very soon, while around two-thirds think these developments will be completely mainstream in 5-10 years, changing consumer appetite, valuations and the wider business environment.

Business model rethink

As we’re already seeing, the big threat for slow moving banks is allowing nimbler FinTechs and challengers to use emerging technologies to prize away their customers. One of the central dilemmas that came through strongly from the conference is that while established banks have the resources to eventually match the tech capabilities of their newer rivals, legacy issues mean that their operating costs may still be much higher. The questions posed by disruption therefore go beyond technology to reach into the heart of business and operating models and offer you an opportunity to transform and remain relevant.

Yet alongside the threats are huge opportunities. The question I want to ask, how are you embracing the opportunity of these technologies and transforming the way you've done business in the past to cater for tomorrow's needs? Embracing disruption can give ambitious institutions a critical edge in an increasingly open marketplace. The conference highlighted the zeal with which many banks are partnering with FinTechs, driving innovation within their businesses and rethinking operations as they look to break free from the weight of legacy and reinvigorate returns.