Now more than ever, individuals and businesses rely on ICT to live and thrive. The financial services industry as a whole has also not been left behind.
Before we get into the details, a quick fun fact; did you know that Title 31 - Money and Finance, of the United States Code lists more than 20 types of entities as financial institutions? These include common ones like banks, credit unions, money transfer platforms, investment and insurance companies, and some not so common ones like casinos, dealers in precious metals, stones and jewels and businesses engaged in vehicle sales including automobile, airplane and boat sales! This is probably the most comprehensive list out there.
Back to the topic at hand. Despite the significant progress made in driving financial inclusion, there’s still a lot to be done to ensure global access to financial services, especially in the most vulnerable communities. There’s a significant opportunity here for financial institutions to “do well by doing good” and ICT can be a great enabler of this. For example, according to GSMA, mobile money has been a key driver of financial inclusion in low and middle-income countries, and user adoption is rising exponentially.
Source: GSMA State of the Industry Report on Mobile Money 2021
Other areas of a financial institution’s business where technology can play a leading role include:
Customer experience
Financial institutions are probably the most agnostic when it comes to customer engagement channels. Several customer transactions can be done using multiple channels - from physical cash (that requires physical branches, agent networks and ATMs), cards, mobile (via web/native/hybrid apps, USSD, SMS, STK), call centres and web to other emerging interfaces like Virtual/Mixed Reality. For this reason, financial services firms often follow customer trends by adopting ICT-dependent omnichannel strategies.
Revenue, profit and market share growth
I’m yet to come across a financial institution without at least one of these growth metrics as a strategic focus. With increased competition and limited resources, most of them are looking at technology to scale existing product or service offerings, diversify product portfolios, create new revenue streams and or expand to new markets.
Limiting Exposure
As one of the most regulated industries, key drivers of global commerce and custodians of livelihoods for global populations, financial services institutions face the risk of fines, cyber-attacks and bankruptcy on a daily basis. For financial institutions, it’s never a matter of if, but when it happens. Whether it’s reducing the financial risk or protecting brand reputation, mitigation is key.
Talent attraction and retention
The financial institution’s workplace is changing to keep up with the talent pool and not lose touch with emerging customer demographics. At any one time, most financial institutions have up to five generations of employees, from baby boomers found mostly in corporate boards and other senior positions, to digital-native Gen-Zs. They all have different career aspirations and views and play critical roles in an organisation’s success. Attracting, leading and retaining them is therefore crucial.
Agility & Innovation
This is probably my most exciting area. Just like many other organisations in today’s increasingly digital world, financial institutions need laser focus on customers, a continuous stream of ideas from diverse sources and speed to market to remain competitive. This can be achieved through innovative processes, products or services and business models.
As we prepare for a post-pandemic world and anticipate the ensuing economic boom, it is critical for financial institutions to become future ready. In a series of short articles, I’ll be unpacking the role of ICT in the financial services sector in more detail, focusing on key technology trends and how they impact financial institutions.
Kevin Odudoh
EHOD: Financial Sector: Vodacom Business
