AI, blockchain, chatbot, digital identity, etc. — there’s enough emerging technology in financial services to fill a whole alphabet book. And it’s difficult not to get swept off your feet by visions of bionic men, self-executing smart contracts, and virtual assistants that anticipate our every need. Investing in emerging technology is one of the main ways in which financial services firms hope to drive innovation. So how do you stay on top of it all, where should you be placing your bets, and how can you deliver customer and business value with technology? To answer these questions, Forrester gathered internal and external experts at its 2018 Financial Services Summit. Fear not if you couldn’t join us in London — I’ve brought you some of the main findings:
- The past often holds the keys to the future. My colleague Benjamin Ensor kicked off the day by reviewing some of the innovations introduced by the British Navy Board, including the use of citrus fruit to battle scurvy. Before you think we’re all hopelessly sentimental, the event took place in the Navy Board Rooms of Somerset House or, as Benjamin put it, the “technology department of the world’s largest industrial organization.” The 19th century has much to teach us about innovation, including the need to focus on outcomes and develop talent by promoting on merit, as well as being open to foreign ideas and never getting complacent.
- You no longer have the monopoly over emerging tech. We love to think of technology as a prerogative of geeks (think The Big Bang Theory or Silicon Valley). But emerging technology is now a boardroom topic. As Tim Hynes, the CIO of Allied Irish Banks (AIB), mused, your board members will read media articles about AI or blockchain and suddenly demand a response from you. If you can show that you’re watching this space for the impact on your business, this will give them confidence (hopefully enough to avoid you being bypassed as they bring consultants to build something you’ve rejected).
- A balanced portfolio is a must. So how do you stay one step ahead of your board (and your competitors)? Tim highlighted the importance of tracking innovations across three horizons. Why? Because “we always overestimate what we can do in 1–2 years’ time and underestimate what we can do in 3–5 years,” he observed. If you’re going to be deploying AI in three years’ time, you need to start thinking now about practicalities such as missing skills. And to avoid being disrupted, you also need to have a view of what might happen in 5–10 years’ time (horizon 3).
“We always overestimate what we can do in 1–2 years’ time and underestimate what we can do in 3–5 years,” Tim Hynes, the CIO of Allied Irish Banks (AIB)
- It’s not about a single technology but a skillful blend. Fintech is subject to fads; one year it’s blockchain, the next it’s AI. But innovation often comes from combining technologies and methods. For example, in my presentation I highlighted how customer outcome orchestration, where we design and deliver experiences that match customer intent and draw on shared customer context, is becoming possible thanks to advances in personal identity and data management, insight platforms, AI, and real-time interaction management. Digital experience will soon cross device and app boundaries as a host of other technologies matures.
- Innovation must follow business strategy. You need to develop a clear vision of how emerging technologies will help your firm. John Berry, senior advisor at Efma, highlighted that banks are mostly exploring AI for customer service while insurers are focusing on the back office. Interestingly, the person who leads AI efforts is most likely to be a head of innovation. To ensure innovation is not an ivory tower, you must build bridges across the organization. This difficult task befell Roberto Ferrari in his new role as chief digital and innovation officer at the Italian bank Mediobanca. Roberto’s useful tips included starting with an internal road show to connect with and listen to colleagues; articulating innovation benefits (including internal customer value!) in terms of cost reduction, new revenue, and new business that will impact P&L and share price; and achieving a quick win (in his case, a project involving robotic process automation across Mediobanca Group) and moving on to a second quick win.
- Winning is not about identifying disruptive technologies but building Agile foundations. Tim Hynes’s observation that it took 70 years between when vitamin C benefits for fighting scurvy were discovered and when citrus actually became present on most ships was a bit depressing. We’re probably a bit faster than that now, but we will have to get more adaptable. My colleagues Diego Lo Giudice and David Wheable showed how to manage this change, away from optimization and toward sustainability, with complexity shifting from the build to the run side and new responsibilities such as service brokering (stitching customer experiences out of microservices) and new roles such as data and AI engineers emerging. And if you weren’t fully convinced about the benefits of combining Agile with DevOps, Diego’s slide will win you over:
Thank you to the organizers, speakers, and participants for making #FORRFS a great event! And if you happen to be in Asia in April, please join us at the 2018 Financial Services Summit Singapore or Hong Kong.
 Some 26% of financial firm executives whose priority is to improve their firms’ ability to innovate aim to do so by investing in emerging technology. Only improving understanding of customer needs and collaboration with partners scored higher, at 28% and 27%, respectively. Source: Forrester Data Global Business Technographics® Priorities And Journey Survey, 2017. Base: 314 financial services and insurance business and technology decision makers and influencers whose priority is to improve their ability to innovate.