Few industries are experiencing the destabilising forces of digital transformation quite like the financial services industry. Under a significant amount of public and political scrutiny, incumbent institutions have to contend with trends such as regulatory changes, changing customer expectations and the upswell of smaller, disruptive players.
For example, as mobile technology becomes embedded into people’s everyday lives, digital platforms are replacing bricks-and-mortar branches. Indeed, the latter are likely to begin to phase out over the next decade, particularly as the costs of running physical stores hinders their ability to be as nimble as newer market players. But the answer to surviving in this new world goes beyond becoming a pure-play digital offering.
When it comes to looking to the future, companies in Australia should look to how their counterparts overseas are adapting. Not just at innovation hubs such as the USA, Japan and Israel, but also to China. A whole generation of Chinese customers are having their financial services products built uniquely for them around their lifestyle, eschewing the traditional model of ownership and appreciated debt.
In China, non-bank players such as Alibaba and Tencent are entering the arena, looking to diversify their offering and build on their established customer relationships; it’s also something Australians can expect to see in the near future.
The industry challenges are immense, but so are the opportunities. One of the best ways to prepare is to begin a process of reinventing themselves. That should start with the questions of ‘what are we good at?’, and ‘what sets us apart?’ And of course, ‘how are we going to make money?’
The focus must also of course be on trust, building and retaining it, amid an environment where consumer trust in the sector is at a low. As competitors rush in amid regulatory changes such as Open Banking, it is imperative that this question is answered.
For further insights, visit five financial services trends that leaders must master.