The banking, financial services and insurance industry has experienced substantial shifts over the past ten years. Perhaps more than any other sector, market forces are requiring custodial banking, asset management and other financial institutions to invest in technology at a rapid rate. These changes are occurring in diverse areas, requiring wide ranging staffing expertise, making prioritization critical.
In talking with our clients, we developed this list of the top 3 challenges in BFSI requiring immediate attention from CIOs.
1. Regulatory changes
After the financial crash in 2008, and the subsequent enactment of consumer protection laws under Dodd-Frank, financial institutions were required to comply with new regulations pertaining to capitalization, central execution, reporting, transparency and risk management.
While much of the existing data already existed at the institutional level, it was often siloed. New regulations required the sharing and analysis of this data quickly, easily and uniformly between diverse stakeholders.
Technology plays a huge role in helping organizations use existing infrastructures in data management, business intelligence, and knowledge management for compliance. By standardizing and integrating diverse data points – including financial, risk and treasury data – across the enterprise, firms enhance their ability to comply with regulations around reporting and risk management.
Yet, such projects are hardly available out of the box. Every institution has different existing systems which need to be updated, integrated and standardized. Every institution has different back office processes.
As a result, every compliance project requires unique planning and management from start to finish. CIOs need strong teams and partners to help ensure the successful completion of compliance projects.
2. Mobile and online banking
In today’s day and age, consumers are online, seemingly all the time. With the advent of mobile, people are always within arms distance of the internet. Clients expect online, mobile optimized availability for all services – from shopping to entertainment to – yes – banking and financial services.
Moreover, mobile is not just used on the road. As of 2013, 68% of people use their mobile device to access the web in their homes. Mobile is quickly becoming the most prevalent form factor for going online.
Mobile creates unique challenges in the financial services industry, including complications pertaining to usability, complexity and information security.
Yet, in order to compete with newer, more nimble financial competitors who emerged during the internet era, large established financial institutions need to embrace online banking as never before. They need to move beyond rudimentary mobile services and provide the full spectrum of financial products that consumers want and increasingly expect.
Blockchain is the new kid on the financial services block. Operating on a permissioned distributed ledger system, rather than on traditional central ledger settlement platforms, allows for faster clearing and settlement of transactions, eases payment processing and increases transparency between parties.
In short, blockchain – originally developed to support cryptocurrencies – can help banks reduce costs, improve efficiencies and provide better, more robust services for consumers. In order to stay aligned with the speed of the internet, better back-end processes are essential.
Yet, the technology challenges, not to mention the regulatory, legal and operational challenges, associated with this new technology, are formidable. Leading edge financial management institutions need to experiment with capabilities, limitations and collaborations to see where and how blockchain fits into their portfolio of services.
Blockchain brings the internet of things to financial transactions. Ignoring this new, potentially revolutionary financial platform places financial services organizations at risk of being left behind.
SRI Infotech is uniquely suited to help your financial services organization meet these challenges in today’s rapidly evolving business world. Contact us today to learn more.