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Financial Services Revolution: Embracing Tech to Redesign Business Models

The Financial Services industry is at an unprecedented interchange, where firms consider the integration of new technologies they also have the opportunity to step back and look at product design, service delivery and customer engagement. This is the right time for firms to openly challenge models which may no longer be as sustainable for the new digital era.

Business model change opportunities through technological advancements of smartphones, wearables, chatbots, blockchain to name a few, advance the industry towards a more consumer-friendly service, with personalised products, more cost-effective operating models and greater data analytics.

Financial Services providers have exciting opportunities to bespoke their value offering, providing them with a competitive edge, which will ultimately become part of their corporate identity, aligning their branding and product to their corporate culture.

The eco-system is changing dramatically, with the emergence of BigTech driven entities into the Financial Services sector. This brings challenges to those firms to operate in a safe, regulated financial services market. Engaging with multiple industry stakeholders can become more complex as the firm scales and this can challenge the firm’s culture and ethos.

Some of the material areas of focus in reviewing existing business and operating models, products and service design and human capital implications of the new economy can include use of some of the following:

01 Technology Advancements

There are really exciting times ahead for the Financial Services industry as new business models, will present themselves on the back of cutting-edge technology, but it’s necessary for executives to keep abreast of these developments, to understand their capabilities and to consider how they can be implemented in their organisations, in line with the firm’s risk appetite.

02 Digitalisation (User Experience - UX & User Interface - UI)

Firms will need to employ innovation and development that lies in delivering a deeper customer understanding and experience necessary to acquire, engage and retain customers in a digitalised world. Successful models will focus on transparency, empowerment and rewarding customers as opposed to penalisation and disengagement, to provide enhanced UX and UI.

03 Cybersecurity & Risk

Use of smart technologies and innovative products and services are not without their risks. This includes existing risks that the firms face that are enhanced by the new additions, but also include new and emerging risks. Firms will need to ensure that their risk appetite and frameworks are considered as part of any material business change.

04 Analytics & Big Data

New technologies enable companies to leverage data and insights in a very seamless manner. The ability in the future, to provide a transformative experience by leveraging enhanced data sets to allow a Financial Services provider to tailor an experience to a customer’s wants, needs and desires. Firms needs to ensure that they have appropriate data strategies, availability and processes around these strategies to benefit from these new capabilities.

05 Robotics Process Automation (RPA)

Use of RPA will drive down the cost of manual tasks, to free up individuals for value add support in the back and middle offices of financial institutions. Firms need to identify the optimal opportunities to employ these techniques in the most effective and efficient manner.

06 Machine Learning (ML) & Artificial Intelligence (AI)

Use of ML & AI in a firms processes can provide varied benefits across ensuring uptime for customers 24/7, enhanced reduction of manual tasks, deep understanding of behaviours and root-causes of issues and increased productivity. Firms will need to consider a roadmap for the identification of use-cases, testing, implementation and enhancement of the technology over long periods.

07 Distributed Ledger Technologies (DLTs) & Blockchain

Industry wide use cases for DLTs and Blockchain are becoming more focused this year, with an emphasis on resolution of cross industry issues. Firms should consider participation or co-ordination with these use cases, to ensure that they have visibility of the benefits, pitfalls and outcomes to inform their own strategies.

Why Grant Thornton

In order to grasp the exciting opportunities firms are facing, the entity needs to ensure that it takes a strategic, risk-based, informed approach to identifying the right opportunities for its business and customer base.

Grant Thornton is at the epicentre of the new FinTech Era and brings a cross-functional, dynamic team and offering in supporting existing market participants looking to innovate in product and services, and to new entrants looking to scale their FinTech businesses within the complex financial services environment.

Grant Thornton Programmes

Grant Thornton Open Finance Hub’s goal is to enable Financial Services Providers (FSPs) to innovate and test solutions to business problems in a safe and secure environment at reasonable costs. Working with the Grant Thornton Hub, Partners can reduce the time and risk in bringing innovative products to market by leveraging our insights, network and multi-disciplinary team.

We leverage an extensive international network of innovative new market entrants to build relationships of common interest and goals with established FSPs to strengthen their business model, relationships with customers and to create efficiencies. This objective is achieved and delivered through the following 3 Programmes:

Open Banking Programme

Business model transformation (As is/Future state)
Open Banking/Finance strategy
Authorisation readiness & Licensing - AISP & PISP

Open Finance Programme

Data enrichment srategy
API gap analysis (enterprise)
Sandbox as a service
Proof of Value (POV) management

Open Data Programme

API lifecycle strategy
API monetisation strategy
API ecosystem development
Open source community development

Grant Thornton Client Enablement

Grant Thornton provides velocity to enable FSPs to solve their business problems. Our Fintech team is support by over 1,350 diverse multi-disciplinary consultants in Ireland, including actuaries, quantitative analysts, conduct, prudential, tax, audit and corporate finance, which can be leveraged as part of the three programmes.

Financial Services Provider (FSP) provides problem statement.
Grant Thornton will search the fintech universe and carry out diagnostics on suitable fintechs that can address the problem statement.
Tech, governance, data management, security and other diligence checks are carried out in advance by Grant Thornton on fintechs during the diagnostic stage and shared with FSP.
FSP selected fintech(s) move to the Proof Value (PoV) stage supported by Grant Thornton.
PoV is undertaken and KPIs are measured via Business Outcome(s) set by FSP: Revenue generation, savings, operational efficiencies, risk reduction.
Grant Thornton supported implementation of successful PoV within the FSP's organisation.