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ESCAPING THE SILOED BUSINESS STRUCTURE – FINDING OPPORTUNITY IN FINANCIAL DISRUPTION

16/05/2019

Ian Stone, CEO, Vuealta

The financial services industry is facing a challenging climate made up of multiple disruptive forces. It’s not the first time that the industry has had to tackle testing times. But a decade ago, Brexit, regulation and cyber security would not have topped a list of industry challenges. However, according to our most recent research, The Future of Financial Services:Planning for Every Eventuality, they are the biggest concerns for decision makers in the sector over the next five years.

With Brexit D-day now pushed back to October, uncertainty surrounding Britain’s departure from the EU is only continuing to rise. The disruption certainly won’t be resolved by the time trick or treaters come knocking on our doors. Our recent research supports this, revealing that over half of UK decision makers in the financial services industry expect political uncertainty to be their biggest challenge in the next five year­s. On top of this, nearly a year on from the implementation of GDPR, the legislation is still proving to be a major disruptor for the financial services industry with organisations working to adapt business processes to adhere to the new regulations.

But that’s not it. There are several other disruptive forces at work in financial services. Whether that’s upstarts transforming the pace of the industry or advancements in technology expanding the cyber threat landscape, it’s no exaggeration to say that our age is one characterised by significant change. But the impact of this disruption doesn’t have to be negative. Businesses that face this uncertainty with flexible and fluid plans, that cover any eventuality, will be able to adapt to the disruption quickly and with ease.

Navigating disruptive times

Everyone is being forced to face the challenges that come with leaving the EU. But, with the consequences of Brexit remaining unknown, even to those in-charge, the ripple effect will touch everyone, from small start-ups to large enterprises, and from the sales department to the supply chain. Concern is so heightened that businesses are increasingly moving their resources out of the UK’s London hub with Barclays recently announcing that it’s moving £166bn of assets due to Brexit fear.

Navigating these turbulent times requires financial organisations to remain calm and tread carefully – stakeholders and customers are relying on them to make considered and sensible decisions, so it’s crucial that key decision makers strive to achieve and maintain a ‘business-as-usual’ approach. This doesn’t mean appealing to naivety or denial, but simply employing an approach that ensures they are prepared for all the potential ‘what-ifs’. By knowing what may lie ahead and having an effective response plan for all eventualities, they can remain one step ahead of all their rivals – whether they be incumbent leaders or new entrants to the market.

Tackling disruption from all angles

Google was recently fined £44m by a French regulator for a breach of the EU’s data protection rules, demonstrating that new additions to EU regulations have been hard hitting even for the behemoths of the tech world. And these regulatory frameworks have continued to take their toll on the finance industry, as 45% of UK respondents expect compliance and regulation to be their greatest potential disruptor over the next five years.

Despite technology presenting significant challenges itself, greater transparency and data protection is exactly where financial services organisations have the power to tackle compliance complexity by enabling instant access to precise information at the click of a button. By implementing the right technology solutions, businesses could quickly connect and verify any of their extensive data sources to break down siloed departments and have a clearer, collective view of what lies ahead.

But advanced technology can also present challenges when it comes to cybersecurity. It’s no surprise that UK business leaders feel this threat to be their second greatest challenge (44%) and potential disruptor (44%) over the next few years. Whether its artificial intelligence, machine learning, big data or digital payment solutions, emerging technologies in financial services organisations can enlarge a company’s attack surface that is vulnerable to hackers. To avoid this, organisations need to implement the right technology that gives them crucial visibility across the business and ensure it remains secure and connected.

Anticipating the next step

Lower barriers to entry have seen a huge rise in challenger banks and upstarts industry wide, ranging from entirely new high street banks like Monzo, to tech-giants like Apple trying their hand at the world of Fintech with the birth of theApple Card. With everyone vying for the same market, it’s hardly surprising that traditional industry players are feeling the pressure.

With the battle so fierce, it is vital that, in this new realm of Fintech, companies do not become complacent. Traditional financial services businesses need to take an integrated approach to planning to ensure all eventualities are considered – consistently questioning how they can maximise the potential of their data and planning effectively to be prepared for future unknowns. If successful, they will present a much greater threat to competitors – whether they be established players or new entrants to the market. Having that clearer sight of the challenges and disruptions that are shaping the industry creates undeniable advantage.

In an unpredictable ecosystem, it’s essential to remain alert to any fluctuations in the market and know how and when to access crucial data. This will quash uncertainties and allow for reliable, robust and clear planning for both the expected, and unexpected, ‘what ifs’.

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Finance Derivative is a global financial and business analysis magazine, published by FM.Publishing. It is a yearly print and online magazine providing broad coverage and analysis of the financial industry, international business and the global economy.