Look at all the Fintech startups that can create an online digital business and make large profits with charges that are a fraction of what the traditional financial services organisations charge.
Gone is the traditional view where your banker or stock broker knows best. The so called ‘millennials’ want to be able to see what others are doing and perhaps follow or mimic the ones that are successful while avoiding mistakes that others can and do make.
While this is not a guarantee of success, it is likely to be just as successful as paying large sums to an investment company to manage your portfolio for you as many of these have lost money over the years.
Why are the large FS organisations not keeping up?
It’s clear that the technology is there to help eliminate huge costs by automating services that were previously done personally. However most of the large FS companies are spending vast amounts of their IT budgets just keeping their existing IT infrastructure ticking over instead of investing in and deploying newer applications.
There is a genuine fear of breaking what is there, however, the old adage applies that "if you want to make an omelette you gotta break some eggs" and traditional IT departments don’t see the value in the new omelette because they won’t get paid more but they are likely to have to move way out of their comfort zone to support new technologies.
Secondary IT budget
This has led to a secondary IT ‘budget’ that is managed outside of the IT department where frustrated business units look to Cloud and SaaS based models to satisfy their needs. While short term this works and delivers what the business needs, it is building up massive problems down the road as FS organisations have yet another integration problem to deal with: how to connect up the various Cloud and SaaS based systems in use with their existing core IT.
The key here is that FS organisations need to embrace the disruption and push through the innovation and new technologies that are out there right into their core IT systems. This does not have to mean catastrophic failures but does mean that IT organisations must be forced to open up what is there to new ideas and technologies.
Traditional IT will push the fear factor about the Armageddon that awaits by connecting existing IT to the new digital world, however, while it might get those guys to retirement, it will leave the organisation as a whole severely disabled in terms of competing into the future.