What does the above quote from a man who is at the helm of the world’s most valuable bank by market capitalization imply? It implies that banking industry as we have come to know so far has changed tremendously. The Banking Financial Services and Insurance (BFSI) Industry witnessed a considerable uptick in the adoption of digital technology in the aftermath of the financial crisis of 2008. The time of the financial crisis also coincided with the mainstream adoption of smartphones, remember the first iPhone with easy to use functional apps was launched just a year before the financial crisis.
There has been a wholesale change in the banking sector in the last decade, driven by intense regulatory reforms and rapid technological adoption (Smartphones, 3G/4G Technology).
For decades banks had little to no competition, a few large banks controlled the monetary system in the country. The banking sector was best characterized to be oligopolistic, this allowed banks to keep the costs higher while services offered continued to remain underwhelming. In the absence of viable options, consumers were required to play by the banks’ rules. With increased competition, the banking sector was required to adopt newer operational models, one that completely overhauled the sector from ground-up. Cut to 2019, the digital revolution has swept across industries, and the financial services space has seen a wind of change.
The role of technology in the BFSI sector has evolved from being another cog in the machinery to the one that is driving efficiency in the industry. The embracement of technology by the financial services industry led to the birth of Financial Technology sector, often shortened as FinTech. This sector leverages the latest technologies to make financial services more accessible and efficient. FinTech is an answer to the fast-growing needs of digitally driven economies that traditional banks, based on archaic business models and cost structures, are finding difficult to meet. To quote a relatable example, apart from mobile phone apps and online banking services, there are hardly any innovations that banks have introduced over the past decade.
The organizations within the BFSI Industry are embracing the ‘next in tech’ trends that are reshaping models and streams across the different financial services sectors to identify new opportunities for growth and customer delight. Many organizations are in the process of framing and adopting a digital transformation strategy that combines elements of robotic process automation (RPA), AI and analytics to automate business processes and embraces digital workforce.
“We are going back to alphabets ABCD…. Artificial Intelligence, biometric, customer experience and data are the four big drivers of finance. And we believe, the finance of the future will not be the finance of the past.” This quote by one of the key speakers Mr. Uday Kotak, CEO and MD of Kotak Mahindra Bank, at the NASSCOM Technology and Leadership Forum, 2019 best summarizes the ‘The Next’ in BFSI sector.