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3 Roles Critical For Financial Services Incumbents in 2016

It’s December. Businesses are finalizing their 2016 business plans, if they haven’t already done so. Unlike last year, most Financial Services incumbents will have acknowledged the ongoing industry disruption and the growing role of FinTech entrants in their 2016 plans.

True, FinTech players have the technology advantage. But, Financial Services (FinServ) incumbents significantly outspend FinTech players on Technology. So, incumbents should not be asking themselves if they are spending enough on technology; they should be asking if they are spending in the right areas.

Given their access to customer base and capital, adopting best practices from FinTech players can not enable incumbents to stay relevant, it can also help move the industry forward.

Borrowing a page from FinTech success stories, here are three roles FinServ incumbents need in 2016 to successfully evolve :

  1. Data Scientist:

In an earlier blog, I built a case for strengthening data analytics within Broker Dealer organizations. Data analytics is equally potent in other segments of the Financial Services industry.

FinServ incumbents are no strangers to data analytics and dashboards. But most are still using analytics to look back (descriptive and diagnostic analytics) than look forward and allocate resources (predictive and prescriptive analytics).

Several FinTech players are able to offer efficient, cost-effective and customized solutions by using analytics (powered by machine learning) as a competitive advantage e.g., Lending Club, Funding Circle. In contrast, sitting on a gold mine of customer data, incumbents are yet to effectively translate available internal data into business insights, let alone assimilate big data as a data source.

A ‘data scientist’ – a combination of a computer programmer and a statistics SME with a natural curiosity to uncover insights by mining data – holds the key to keeping incumbents competitive in this data-rich environment. But the demand for this talent far exceeds the current supply. Add to the requirement the quintessential element of business/ industry knowledge, and resource is even scarce. So incumbents may need invest in training or hire niche analytics service providers in the coming year. But this is for sure: you need data scientists to win in this digital era.

  1. Technical Product Manager:

In another blog, I stated that it’s time FinServ incumbents starting thinking about their technology as product offerings. It is not that incumbents are not offering technology solutions to their customers, be it online account access or the online application process.

But, Product Managers – and Product management discipline – will bring what continues to be missing in incumbents’ current approach: a) focus on user experience, b) investment decisions at the “solution” level (rather than a “system” level), and c) faster delivery of relevant features while allowing the solution to evolve over time with a roadmap.

As more consumers turn to digital interactions for convenience, all these benefits from product management will help FinServ keep their customers engaged without breaking the bank.

Just going by the number of LinkedIn Technical Product Manager job postings, several leading FinServ incumbents are also realizing the need for this role. If you are a FinServ incumbent with considerable IT spend, you may need this role in your organization.

  1. Customer Experience Strategist:

As FinServ incumbents transition their business model from the physical (e.g. branches) to the digital (e.g., apps to transfer money) world, the role of a Customer Experience Strategist (probably considered a good to have) becomes vital.

Incoherent client experience – or worse, client experience inconsistent with the brand promise – resulting from business transition can end up alienating existing customers.

A Customer Experience Strategist can minimize client experience dissonance as the organization gets a business model make-over.

Though digital proliferation is undeniable, if you think of a customer’s life cycle in today’s Financial Services business, majority of “moments of truth” still involve human interaction (e.g., the sales teams, the financial advisors, the client service reps, etc.). Hence a User Experience Strategist or a Digital Experience Strategist cannot sufficiently address this need.

Unlike the first two roles, the role of a Customer Experience Strategist could very well be filled from internal talent, since CX strategy needs to be grounded in the tenets of your brand promise.

No time to lose as disruption continues

As the digital disruption continues, the industry could be next impacted by Blockchain technology. Goldman Sachs recently proclaimed that “the Blockchain can change… well, everything” and joined several VCs and banks like Santander who are already bullish on blockchain.

The blockchain is a relatively fast, irreversible way of recording ownership of assets across a wide network of computers. Though blockchain is  mostly used for bitcoin and crytocurrency right now, for the financial services industry, it offers the opportunity to overhaul existing banking infrastructure and speed settlements by eliminating middleman/ intermediaries.

While we may still be 10 years away from blockchain becoming mainstream according to some thought leaders, the conversation on blockchain has quickly shifted from “if” to “when.”

And if blockchain’s current implementation hurdles (e.g., governance) are resolved in the coming 1-2 years, this technology will bring another wave of large-scale change to the Financial Services industry.

So, unless incumbents catch up and get the talent/ skillset needed to compete, they will be left behind. The three roles mentioned are complementary and can help FinServ incumbents stay relevant as the industry continues to evolve. It is up to the organization to realize the need and take action in the coming year.

Additional reading:$FILE/EY-the-science-of-winning-in-financial-services.pdf

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