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To move forward with their digital strategies, financial services companies will need to adopt additional roles to define the very rules of the new digital economy.
Today, many financial services companies recognize that rules and guidelines for the industry are outdated. Of the IT and business executives we surveyed for our Technology Vision 2017 report, 65 percent believe that government regulations have not kept pace with technology advancement.
To move forward with their digital strategies, financial services companies will need to take on additional roles to define the very rules of the new digital economy. From technology standards to industry best practices, government mandates or ethical norms based on public opinion, in the ecosystem-driven economy, one thing is clear: the rules that need to be defined span a wide scope.
Where guidance doesn’t exist
In some cases, there is simply no existing guidance relevant to the challenges of the industry’s products, services or value chains. This is often the case with ethical guidelines, as new technologies present new types of considerations with ethical implications.
In the case of virtual reality (VR) for example, Google’s Daydream VR team recognized how damaging foul play can be in online communities, and wanted to prevent abusive virtual behaviors from driving customers away from the technology. The company built features into their VR platform that not only recognize the sanctity of personal space, but also encourage positive interpersonal interactions with bonus features including animations and sound effects (such as fireworks and clapping sounds when players give each other high-fives). These features don’t accompany aggressive actions, encouraging players to exhibit positive actions in order to earn rewards.
Existing but outdated rules
When businesses do have existing operating rules, they were likely written prior to the dawn of the digital era and long before any of the new digital industries or technologies were created. As a result, they’re consistently incomplete, often irrelevant and can limit progress when applied to new hybrid ecosystems.
The finance industry in Japan, where legacy regulations limit a bank’s ownership in non-finance companies to between 5 and 15 percent, is a case in point. Regulators in Japan consider fintech companies to be technology firms, not financial firms—so while megabank Mitsubishi UFJ might want to take a portfolio approach to investing in fintech startups, regulations make that impossible to do strategically. In response, Mitsubishi UFJ is building an in-house fintech R&D division to deliver the innovation they need.
Factoring in every partner
In digital industries, competitors partner with businesses from completely different areas of the economy, so the rules for a new industry must be written to consider and apply to every partner.
Who could have imagined that General Motors would invest in a car-sharing service, let alone acquire an AI company to work toward automated driving? We will likely see more mashups to come—and for them to shape new digital industries and the rules that govern them.
Regardless of the circumstances that lead to the formation of a new industry, companies will need to collaborate with ecosystem stakeholders who do not share the same industrial heritage, and they will need to work with industry organizations to set standards. For financial services companies, it could mean an opportunity to take on a leadership role.
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