Coursing in the Flow of Connected Digital Transformation

Returning home to Canada from the UK yesterday, my flight did not have WiFi.?Less and less common these days, but not unusual flying over the North Pole. ?Alas, there are still some spaces that the internet eludes, and with this, the reverberating drumbeat of digital finance.?For the majority of the world’s population however, access to digital is a day to day reality, viewed as a “right” by many, driving transformation, progress, and the democratization of information.

FIS’s recent 2022 Global Payments Report forecasts that in 2025, cash will make up 10% of global transactions.?In North America, this percentage falls to 6%, and in Canada specifically, the percentage of cash transactions is predicted to fall to 3%. ?This makes Canada a leader in going “cashless” and adopting electronic payments, in a typical Canadian manner, without pomp and ceremony.?

While “cashless” to “branchless” may seem like a logical next step, branches will maintain their relevance (over the short to medium term), as re-imagined entities, within the context of shifting from digital presence being extension of physical, to physical presence being an extension of digital.?In this environment, consumer and member expectations will be high, and a solid transformed connected digital experience will be critical in maintaining thoughtful and attentive relationships in physical settings.

Finance is a necessary utility, and transactions will continue - the question is more how this ebb and flow will ultimately change the landscape.?Digital newcomers will arrive and aggregate scale, incumbents who place a stake will persist, and those who do not move far enough away from traditional business models will be faced with a diminished value proposition. For community banks and credit unions, part of this effort must be solving the problem of “requisite scale,” by tapping into solid and robust “conferred scale.”?Articulating the community value proposition and framing this digitally is a huge opportunity that ought to be the focus of collaborative conversation for small and medium sized institutions, and their partners.

In thinking about an imaginary 2025 book on the “History of Modern Finance,” a number of chapters will be written with respect to the current period that we are living through.?One will most certainly detail the efforts of those who technologically modernized and re-invented their overall experience, physical and digital combined. One may detail the consequences for those who did not.?Another may discuss notable advances, such as composable/embedded Finance, API driven finance, digital currencies, digital wallets and SuperApps.?And perhaps another delving into more precarious pursuits - doubling down on traditional delivery, cryptocurrency and associated speculation, and other possibilities. This list is not intended to be inclusive, but to suggest that the overall story will be one of transformation and re-positioning, and of excitement and possibility for institutions that participate in this opportunity.

Those of us who have spent our careers managing IT, understand that the discipline has over the long haul been one of managing constraints, bridging business requirements to deliver effective user experiences via technology.?For the most part, this approach has worked in an environment characterized by linear change.?While maintaining a management balance of constraint vs. experience has not been without friction, it was possible. Modern technology however is pushing the envelope on digital expectations, not just in Finance, but across society. ?Without upping the ante proportionately and reducing and/or eliminating constraint, it will not be possible to maintain balance. Modern technology is required to deliver innovative digital experiences, whether remotely, or physical. "Phygital" or "digical" experience represent an artful intertwining of what we have known previously. Discrepancies will build as we deal with legacy constraint, and “being on the right side” of the technology paradigm is important to ensure effective digital transformation and mutually beneficial customer and member relationships.?History is being written as we speak, and it’s exciting to course in the flow of financial services transformation!