80% banks are exploring possibility of creating digital currencies, Capgemini report

The technology-business environment has witnessed unprecedented change. Market dynamics suggest an acceleration in this rate of change, moving from one normal to another. Capgemini recently published TechnoVision 2022: Financial Services, to enable financial services institutions successfully navigate the business and technology landscape. In this post, we discuss the key trends based on this report that will guide the C-suite to plan effective strategies and explore the scope of innovation for financial services firms from different perspectives. 

1. User Experience – It has become crucial for financial services to create a personalized and seamless user experience for customers and employees. 

• Relying on automated responses won’t be sufficient for financial institutions (FIs) any longer and they should start adopting a mix of human and Artificial Intelligence (AI) interaction. 
• Financial institutions can use predictive analytics, AI, and machine learning (ML) to deliver targeted offers tailored to individual customers. 
• The availability of real-time usage data helps build a unified customer profile, hence maximizing the appeal of the FIs. 
• Automation is helping FIs deliver a better customer experience by quick customer onboarding and self-service, freeing up resources and speeding up the back-end processing time. 
• FIs are redesigning their branches to cater to customers’ new expectations, which may include humanized consultation services, automated self-service facilities, community spaces, and more. 

2. Collaboration – By leveraging collaboration between sectors and organizations, it is possible to exceed customer experience expectations. 

• Agile, collaborative, ecosystem-based models are driving innovative marketplaces and products. 
• Seamless payment experiences are increasing the adoption of embedded finance outside of financial organizations. 
• Over 80% of central banks are exploring the possibility of creating digital currencies that would allow users to transact in a peer-to-peer fashion. 
• Financial assets are being traded through security token offerings in cryptocurrency exchanges. 
• As financial services firms’ workforce is increasingly choosing to work remotely, there’s a need to establish suitable hybrid models.  
• With Internet of things (IoT), there is a rise in the launch of integrated financial and insurance products that are backed by 5G connectivity. 

3. Leveraging data for growth – Data is very important to have good customer experiences, well-run operations, and products and services that can optimize themselves. 

• Data estate modernization is moving to the cloud, which is introducing new opportunities to modernize business intelligence and analytics landscapes. 
• Clients are looking for ways to avoid vendor lock-in, and one way this is being done is by containerizing data movement applications. 
• The demand for AI/ML ops is increasing due to the commoditization and broader application of AI. 
• Low code/no code platforms are bringing more AI-driven automation capabilities to business users, which is increasing the urgency for sound data governance and data management practices. 
• Near the edge, analytics concepts help organizations reap the benefits of data faster. 

• Using data to offer a product that is tailored to the customer’s needs is important, and in the future, this will be an expectation of all customers. 
• It is important to share exposure/risk data with all stakeholders to make insurance models more resilient.  
• Financial organizations are exploring quantum computing and metaverse avenues to use their data effectively. 

4. Process on the fly – Financial services must build, manage, and run processes that match the dynamics of the digital world. 

• Business processes are being enhanced or even rethought using modeling techniques and task-mining technologies. 
• Intelligent orchestration and Intelligent Process Automation (IPA) are bringing the back office and process automation to the next level. 
• Financial institutions are changing their governance models to allow for more citizen development. 
• Financial institutions can use APIs and real-time event processing to integrate many siloed applications without having to change the systems themselves. 
• AI is being used to create processes that can adapt themselves on the fly based on client behavior. 

5. Applications unleashed – FIs can benefit from creating a connected mesh of microservices that have speed and quality and is adaptable to evolving business needs. 

• Banks and insurers are adopting microservices architecture and implementing the concepts of an application service mesh to establish secure communications between microservices. 
• Organizations are developing smart AI-powered applications to achieve digital transformation without disrupting the existing systems.  
• 5G has pushed the growth of edge computing applications to process and analyze data at the edge of the network.  

• CFOs are gathering knowledge on digital assets, currencies, and other blockchain applications.  
• The metaverse will provide a significant use case for Web 3.0 technologies in 2022 and beyond.  
• Financial services organizations are incorporating sustainability into their products, operations, and services. 

6. IT Infrastructure – The global IT infrastructure is seamlessly adjusting to the evolving technology and business landscape. 

• Financial institutions are migrating to the cloud, hybrid cloud, and multi-cloud strategies to improve their digital transformation journey. 
• Companies are choosing confidential computing to keep data safe by encrypting it even when it’s being processed. 
• Cloud-edge integration is becoming more rapid due to advances in AI/ML, 5G deployment, and IoT development. 

7. Balance by design – Financial service institutions must follow overarching design principles to ensure that their technology business is flowing, adaptive, and responsive. 

• From product to experience: Service providers must shift their focus from providing products and services to creating unique customer experiences. 
• From data to value: A financial organization needs to be data-centric to remain relevant and create added value.  
• From insight-focused to a partnership: Banks should partner with Fintechs to provide a variety of products and services to engage in new markets. 
• From fit for purpose to sustainability: The focus on sustainable business operations within the financial industry has been around for a while, but it is now expanding to include areas such as the biosphere, society, and economy. 

The accelerating pace of change is inevitable and financial services firms must embrace it to stay ahead of the competition. It’s important to explore these trends from different perspectives to gain a comprehensive understanding of how they will impact the industry as a whole and to help your business thrive in the years to come. 

Image source: Capgemini