Nordic Financial services in the new decade- Trends from Client conversations

The times are tough and the whole world is coming together to fight the COVID-19 challenge. Some of the brave souls are fighting the enemy at the front lines (hospitals) and most of us are confined to a new reality- working from home. We all need to do our bit and support the fight in whichever way we can, I work in the IT industry and have seen closely how our team members are supporting the critical services such as health care, financial services etc. in these trying times.

While we never anticipated that the new decade will start like this, I thought of sharing my views on the Financial services in the new decade and how we have seen the business shaping up. It is extremely difficult to predict where we will land after this crisis is finished but over the course of next few weeks I would like to converse about what trends do we see in client conversations, how we have overcome challenges in the past and what we can expect going forward.

In our Financial services digital conversations in Nordics the undercurrent is mostly around the threat of the new Digital players- 

? Will they be a threat next year or in next 5 years?

? Are they a big enough threat or just another trendy organization which will be gobbled up by major established players?

? Do we go with the acquisition, build our own capabilities or employ the ecosystem play strategy?

? Cost reduction vs modernization theme 

? Are the big FS players agile enough to respond to a threat landscape which is changing rapidly- competition, regulation, security etc.

There are no straightforward answers to these questions and at the same time we have seen successful examples of FS clients who have used Digitalization as an opportunity for cost savings through automation, cloud solutions and legacy modernization helping them provide superior customer experiences on par with the ‘Digital players’.

While Nordics is a market with its own intricacies and each player has its own peculiarities, I’m listing down some of the trends we are seeing in the Nodics FS area (some are the Global trends we see impacting FS in Nordics):

o Trend 1: Agile- We see most of the organizations embracing Agile as a way of life, of course clients are in varied stages of maturity- some are starting out and some are already quite ahead. This changes a lot as now partners & clients are in the same team, some of the queries we hear- how do we work with SLAs/ KPIs, what happens to contracts, would agile work for legacy etc.

o Trend 2: Security- The threat landscape is rapidly changing and clients under tremendous pressure to evolve in real-time and protect the clients. This could become a huge reputation risk and wipe off the valuations in an instant. Some of the queries we hear- how do we secure the systems with multiple stakeholders involved, how do we keep abreast with changing threat modus operandi, how do we secure our systems from internal threats etc.

o Trend 3: Compliance- Regulatory complexity is increasing with each passing year and this has been one of the areas which has eaten quite a lot of IT budgets & bandwidth with the looming threat of huge penalties. This is a board level discussion and one of the highest priority items we see.

o Trend 4: Automation- This has been the favorite word for business having a two-fold effect of taking out costs and shifting resources from redundant tasks to significant engagements. There are no silver bullets & everything can't be automated but wisely used Automation could be an effective strategy.

o Trend 5: Data is the new oil- Analytics boosted by real-time processing, dynamic integration of new data sources and artificial intelligence has been a major differentiator. Organizations are using data to serve clients better and profitably.

o Trend 6: Growing interest in Cloud- The interest has moved from theoretical exercises to actual implementations (although limited) and more & more organizations have been trying to balance regulatory restrictions with the possibilities cloud has to offer. The most common question we hear is the adaptability of Cloud to the regulatory environment and how could FS organizations use more & more Cloud in the limits .

o Trend 7: Superior customer experiences- In essence all the above threads serve as a means to this end. The expectations of today's customers from their Banks & Insurers are moulded by the experiences they are served by Google, Apple, Facebook etc. Anything short of a good overall experience served on your online portal or application can be the difference between retention & attrition. This coupled with the challenge of Fintechs is one of the biggest disruption threat facing the financial services industry.

o Trend 8: Streamlining IT spend- This has been a constant theme over the years and will be ever more relevant in the wake of the ongoing crisis with clients optimizing precious funds with Outsourcing, Near-shoring, Offshoring, Captive offloading, Decommissioning, Landscape modernization etc. I expect this trend to be one of the main discussion points during coming months.

I will talk about these trends in detail in the subsequent posts.

Feel free to reach out to me to discuss how Digitalization could be used as an opportunity to both Optimize costs & provide Superior customer experiences here or over a remote session (this is going to be the new normal). Stay healthy & safe!