Deloitte and WEF have recently published the last in a series of research reports into the Future of Financial Services. The series started in 2015 and has tracked the potential impact of technology on financial services. As with most 'future of' reports, not everything that is predicted becomes a reality. These reports are intended to stretch our thinking and challenge existing business models as we search for something better. Given that framing, the most recent report contains some real gold for leaders and strategists in the financial services industry.
A common thread of the research has been the impact of Artificial Intelligence (AI) in financial services. There is no denying the potential for innovation, possible as a result of large data sets, cloud computing and the maturing of data science as a business discipline, however translating this potential into value appears to be less clear for many executives. This report notes that “for many executives the link between developments in emerging technology and tangible business outcomes is still unclear” and identifies four pathways that can be explored further by both the skeptical executive and passionate technologist:
- Establishment of ecosystems beyond finance
- Integration of physical and digital processes
- Reorienting transactional flows
- Reimagining core functions
Each of these pathways acknowledges that we are now at a point of convergence (where a number of technologies are maturing at the same time), and as a result the gap between potential and clear outcomes is closing. Whereas in previous reports the case studies were more discrete, this report illustrates that success in the future comes through ‘combinations’. What we know about the most impactful innovations is that it’s all about the right combinations. This was so elegantly highlighted by Larry Keeley and his team at Doblin who identified this through their 10 Types of Innovation research.
Running parallel to the convergence is accessibility. Now, more than ever, these technologies are accessible, and in most cases affordable, providing innovation opportunities from start-up businesses through to established incumbents.
So, what does this all mean for New Zealand? From my reading, there are a few areas where I think we have a great opportunity to progress via a 'test and learn' approach;
- Our scale provides advantages in establishing ecosystems beyond finance. We have a relatively tight-knit business community (both within the financial services sector and across other sectors), which presents us with obvious advantages of being well-connected and therefore barriers to establishing ecosystems beyond finance are more surmountable than in other countries. Added to this, the aspects of our culture that have allowed us to stay united through COVID-19 give us head start in building ecosystems that support a broader 'build back better' goal for New Zealand, and all those that are stakeholders of our financial system.
- Our culture sets us up to play as a global centre of innovation. Larry Keeley is a frequent visitor to our shores and recently presented via Zoom in an event organised by Callaghan Innovation. Larry's argument is that there is no better place to innovate than in New Zealand where we have high levels of connectivity across business and government (see earlier point), an orientation toward action, and a culture built around the need to be self-sufficient. Perhaps New Zealand could provide a deep demonstration of technology driven innovation that can address the concern expressed by executives regarding the lack of clarity around outcomes.