The competitors facing asset and wealth managers, banks, and insurance companies aren't who firms thought they'd be. Emerging technology presents incredible opportunities--for someone else. The customers seem to be changing their minds about what they value most. Well, nobody ever said it would be easy. For some, this is a time of great opportunity.
Nearly 55% of banking and wealth management professionals believe artificial intelligence (AI), robotics and automation will shape the future of the global financial services industry. According to research by Avaloq, nearly 34% cited the increasing use of more open and collaborative platforms and 26% cited the rise of distributed ledger technologies and cryptocurrencies. The research also found that three of the top current areas digital infrastructures are delivering significant improvements in performance include: ensuring compliance under changing regulations, improved customer experiences and better cyber security. Superior customer experience was singled out as the most competitive advantage for institutions to have in five years' time. Nearly 41% of respondents cited this as their preferred competitive advantage and 19% for'operational efficiency'.
Ernest Hemingway was known for his stories about a lost generation, bullfighting, and big game hunting, but one does not generally associate Hemingway with ideas of innovation and disruption. When a character in the novel is asked "How did you go bankrupt?" he replies, "Two ways, gradually, and then suddenly". How better to describe the process by which innovation and disruption can creep up on an industry or an organization, resulting in a sudden shift in the landscape. Leading financial services firms are facing unprecedented pressures, from technologically savvy customers, from hard-pressed regulators to Washington DC politicians of all political spectrums, and from aggressive new market entrants. This wave of financial services innovation and disruption possesses serious potential to unsettle perhaps the most traditional and central industry in our economy.
When America's biggest bank, JPMorgan Chase, hired Apoorv Saxena in August 2018 as its global head of AI and machine-learning services based in San Mateo, Calif., finance industry watchers saw that as a sign that the bank was making a big bet on artificial intelligence to shape its future strategies. Saxena previously headed product management for cloud-based artificial intelligence solutions at Google. At JPMorgan Chase, he also oversees asset and wealth management artificial intelligence technology. According to Saxena, AI will help financial services companies expand banking penetration worldwide, launch new products and deepen customer engagements. AI has helped technology companies and others outside of traditional banking enter financial services, such as with mobile banking and digital money offerings.