The times we live in are full of change. This forces businesses to search for new principles, approaches and tools to help them adapt and compete. Below are the keys to becoming a financial services company of the future.
Digital intelligence and open digital ecosystems
Digital transformation is not an easy task, but it’s necessary for any business that wants to keep its competitive edge. A digital company can be much more efficient than a traditional one. Often, digital startups can easily compete with deeply rooted traditional businesses even despite a lack of resources. Demand for digital transformation is going to continue to be high in 2022. The growth of productivity driven by digital technologies hastens the Fourth Industrial Revolution. Ninety-one percent of surveyed producers increased their technology spending last year; therefore, it is expected that Industry 4.0 is going to boom this year.
The only way companies can compete is through a deep digital transformation. Often, this involves automating tasks formerly handled by employees as that can reduce mistakes or breaks in information processing.
Financial companies use big data for risk management and analyses of market data in real time. Applying machine learning to these processes makes it easy to catch anomalies in big data. For instance, with the help of these technologies, commercial banks can easily recognize and stop fraud activity.
One of the key features of big data is its ability to reduce the costs of client communication and sales. Data analysis can provide a clear vision of what is going to be relevant for a specific client and what needs to be done to hit a particular goal. This is why digital ecosystems have become more popular—they can analyze big data from a wide range of sources, and they do it really fast.
The government plays a crucial role in the development of a financial sector as it possesses system data and can influence almost any business. Companies constantly apply for different public services, and if a country is technologically advanced, this can create a great environment for the development of fintech businesses that can offer something new.
For example, thanks to close integration with state databases in Kazakhstan, Bank Freedom Finance Kazakhstan was able to launch a digital mortgage product aimed at getting a mortgage loan within 24 hours. Property assessment and mortgage registration occur online. Now the bank is going to launch another service to help people quickly buy cars they like online. These digital products would not be possible if the Ministry of Digital Development of Kazakhstan weren’t so open and ready to cooperate. Thanks to the ministry, we were able to integrate its databases with our products and automate business processes. In many countries, this is simply impossible.
A focus on human capital
Like all other assets, human capital can be measured and developed. This type of asset also has a return on investment (ROI). Human capital management directly affects a company’s key performance indicators (KPIs) including productivity, labor turnover, quality of product, labor safety and customer satisfaction. According to App Economy’s analysis of Glassdoor’s best places to work rankings over 10 years, 60% of the 20 top-ranked public companies beat the S&P 500, and 91% of them had positive returns up to June 2019. Moreover, the best places to work would have more than doubled investors’ money compared to investing in the S&P 500.
The simple truth is that big data is not only a method for finding new clients; it’s also a tool to attract talented employees and keep them in a company.
Emotionally intelligent leaders and a trusted operating environment
Both executives and support staff have to develop soft skills and emotional intelligence (EQ). According to a variety of research, EQ plays a key role in the future success of managers. In 2020 and 2021, business leaders were forced to deal with new challenges. It’s never been an easy task to run a company and lead a big team, but during the pandemic, this task has become harder. Research has found that 80% of employees who don’t get along with their managers are disengaged and about 50% have quit because of their manager. Labor turnover has always come at a high cost for businesses.
In other words, any company that relies on high-speed, sophisticated processes should promote EQ among its staff and do everything needed to preserve a trusted operating environment.
As long as new technologies continue to evolve, the financial sector is going to change. Artificial intelligence (AI) has become an important part of the investment business. In fact, AI facilitates the growth of the industry because of its high efficacy.
Automation has given rise to another new technology dubbed robo-advising. This technology uses algorithms to help an individual investor to make investment decisions. However, even though robo-advising can help, it just can’t replace real consultants. Consultants can explain to investors what’s going on, give advice and offer support. Their task is to help their clients to better understand the clients’ purpose and objectives. A consultant’s role is still very important because they are not simply advisers. To some extent, they might be considered a client’s partner.