In Financial Services, There is Literally a Burning Platform

With the Autumn Equinox passing, our weather is once again changing as seasons transition.?? Seasons are also changing in the world of financial services technology, as the radical transformation we have been anticipating for decades is in the process of occurring.? If there ever was a time for a burning platform in financial services, it is now.

At fall industry events such as Sibos 2023 which I recently attended, platform and ecosystem thinking is dominating conversation as financial institutions grapple with strategies for bringing together cogent technology frameworks for delivering intelligent digital experiences that matter when, where, and how for their constituents.? As these strategies are executed upon, the world as we know it in financial services will evolve rapidly – fasten your seat belt.

Ecosystem and platform technology confers a natural economy of scale, resizing opportunities for those that embrace disruption, both early adopters and fast followers.? Digital intensifies presence in existing markets, while at the same time paving the way to expand into new markets. ?Eyes are on the prize, with a recognition that consumer sentiment and preferences are changing, the opportunity is now to position strategically to capture this shifting demand.? To be successful however, it is necessary to have products and services that effectively compete with emerging modern alternatives.

Value propositions are very seldom self-sustaining.? The delivery of value must be maintained and continuously aligned to circumstances.? In economics value is defined as the quality to cost ratio.? In an environment such as ours, characterized by disruptive change, the “quality” of digital offerings dramatically increases due to the application of modern technology (i.e., artificial intelligence), and costs go down due to natural economies of scale and wider adoption. ?Embracing modernity and going to market with digital products that engage consumers add value in this context.? Alternatively, standing still in a competitive landscape such as this where quality is a relative measure leads to an erosion of value.

In an environment characterized by disruption, equally apparent as the opportunity, is the threat.? Change is both positive and negative, with opportunities representing potential gain, and threats representing potential loss. For incumbent financial institutions, inaction in the face of industry change is a threat.? This need not be the case - banks and credit unions have much to gain by positioning for the future.

With respect to credit unions specifically, digitizing the cooperative value proposition is a huge opportunity, given the power modern technology has to amplify what credit unions have historically emphasized – member and community well-being. History shows resilient and hearty people bringing credit unions to where they are today. ?History is still being written as we proceed, and choices made today will affect the direction of credit unions tomorrow, either positively or negatively for their membership.

For mid-tier financial institutions, platform and ecosystems requires conferred scale. ?Today, in 2023, credit unions have an opportunity to do what they do best – cooperate and collaborate to stand up a digital platform that emboldens and modernizes the cooperative value proposition. By working with the same industriousness as those who have supported the movement to date, this can be done with a consolidated focus. ??The future needs credit unions, and this puts an onus on credit unions to be ready for this very future.