With the relentless pace of change across financial services today, organizations are tasked with defining the new rules.

In parts one through five of my series on our Technology Vision 2017 survey, I have discussed how artificial intelligence (AI) technologies, new digital ecosystems, workforce marketplaces, and technology specifically designed for humans are likely to impact financial services institutions over the next few years. In this post, I will conclude the series with a look at the areas of the new digital economy that still need to be defined. In our Technology Vision 2017, we refer to those areas as the uncharted.

New industries demand new standards

In financial services, emerging digital ecosystems are transcending disparate markets to create new industries.

  • For banks, major aspects of the future have yet to be mapped out. For example, while Europe’s Payment Services Directive (PSD2) mandates that financial institutions give customers and third-party integrators programmatic access to their data, it does not specify where the data should reside, nor does it provide specifics on security and authentication models.
  • In insurance, regulations and safety standards for technologies like self-driving cars have yet to be set in stone. Insurers could help define civil and criminal liability between driver and manufacturer, according to the level of automation at the time of an accident.

Pioneering new banking rules

Banks now have an opportunity to take the lead role in setting guideposts. They can build on the fact that customers still have a lot of confidence in the banking sector to protect their data and execute transactions in a safe and secure manner.

Importantly, banks cannot wait for regulators and governments to set the terms of competition. This becomes even more important when you consider that bankers understand industry challenges—security, fraud, privacy, digital ethics, emerging technologies like blockchain and so forth—much better than regulators.

Banks can move faster than regulators (and even pull regulators along) to pioneer uncharted banking terrain, influence customer behavior, and help shape new standards, processes, practices and cross-industry partnerships.

Defining the rules for a new digital insurance industry

Similar to banks, insurers have the opportunity to step up and help define the rules and risk management practices of a new digital industry, in partnership with regulators, standards bodies, consumer protection organizations, open source communities, and other ecosystem stakeholders.

There is much work to be done, since regulators and governments are struggling to keep up with the pace of innovation. In some cases, new products, services, or value chains might even raise new ethical questions.

For insurers, digital trust (security, privacy, and digital ethics) is critical to any digital industry strategy. Rules and standards can now even be embedded within the technologies themselves, the most mature of which being the distributed database known as blockchain.

 

New technologies for new challenges

Conclusions

As financial services institutions chart a new course and seek to reshape business models for a digital world, it is easy to assume that technological prowess will become the dominant source of competitive advantage. However, we believe 

that a combination of people and technology holds the key to a truly competitive advantage.

As the world continues to evolve, financial services institutions that embrace a deeper dive into a People First mindset can find benefits at every scale. Being a leader isn’t just about incorporating new technologies. It’s about finding a place in the next evolution of society, by empowering people, whether they are customers or employees. 

To learn more, access the full Technology Vision 2017 report, as well as the Technology Vision for Insurance 2017 and Banking Technology Vision 2017 reports.

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