Banks are working hard to increase and improve their digital financial services capabilities.
The use of mobile apps in particular has seen as much as a tenfold increase from 2010 to 2016 in North America and a threefold increase in Asia-Pacific, where uptake was already strong, creating disruption in a traditional industry.
Speaking at the 5th Annual Big Data Summit in Toronto, Murat Kristal, director of the Master of Business Analytics program at the Schulich School of Business, asked the question, “why are we pursuing digital transformation, which is such a huge disruption factor?” He cited statistics that show 70 per cent of this trend is driven by changing customer expectations and 45% of new offerings are being brought to market by “fintech” companies, rather than traditional financial institutions. The question of whether these players will cooperate or compete will be an interesting development to watch, he told his audience at the Hyatt Regency hotel.
These developments, Kristal said, pose a dilemma for financial institutions: how can you know when this kind of disruption will hit your organization and how will you respond? And that response can either be approached from an operational or technology issue, or from a strategic perspective.
Digital transformation will involve three components:
- Digital finance business function – easy for the consumer but hard to build
- Digital technologies – including big data analysis
- Traditional service providers vs fintech corporations
As an example, Kristal cited Starbucks, which is the largest user of Apple Pay in the United States, processing millions of transactions without going through a bank. By switching to this technology, the coffee company became a major player in the financial services industry, bypassing traditional financial institutions and deriving a new source of revenue.
In a survey conducted by Schulich partner Deloitte, Kristal cited results that showed most companies would be developing or sourcing Artificial Intelligence technology this year.
Innovation in Digital Services Survey
In partnership with Deloitte and Schulich, Kristal announced that the researchers from Deloitte Cognitive Analytics and Visualization Lab will be conducting a global survey, beginning this year, of financial institutions and how they go about creating digital financial services. The survey has been in development for more than a year and will provide a detailed and comprehensive picture of the digital innovation trend.
For more information on the survey and how organizations can strategize around implementing digital solutions, watch this video of Kristal’s presentation to the Big Data Summit on March 5.
Murat Kristal is also director of the Schulich Executive Education Centre’s Centre of Excellence in Big Data and Analytics and program director of the Masters Certificate in Analytics Leadership program (starting Sept. 16, 2019). For more information and more video about the program, visit the program website.