The financial sector is facing an unprecedented technological revolution. Traditional market players must reinvent themselves as technology companies to satisfy customer needs and resist competition from new entrants. Technology is no longer a simple tool, but a strategic lever for growth and differentiation.
By Jérôme de Gallé, Director of Innovation and Digital Transformation Consulting for the financial sector at Avanade
The advent of generative AI is no exception and on the contrary reinforces this trend of technological adoption and increasing impact on the company’s sustainability.
Easier access to new technologies has led to the emergence of new products and services, such as “Buy now pay later”or alternative payment solutions, favored by the PSD2 regulation. New business models such as BaaS/BaaP (Banking-as-a-Service/Platform), integrated insurance or connected healthcare are emerging, thus meeting the growing expectations of customers inspired by their experience with other sectors (taxi ordering, delivery meals, travel reservations, etc.).
In financial services, all professional families who are in direct contact with technology – the use of which has a direct impact on their performance, whether commercial or operational. This is the case of low-code/no-code, which saw the birth of the concept of “citizen developer” – the possibility for everyone to implement applications without (or with little) particular knowledge, whatever their position in the organization. However, and in a completely paradoxical way, the arrival of new technologies allows for a level of abstraction such that technology has never been so present and at the same time is so little visible. This is the case of the cloud, which abstracts infrastructure while offering an increasingly rich toolbox for implementing applications – increasingly through the assembly of components.
Therefore, the role of the IT department is as critical as ever, because any technology, whatever it may be, always requires adequate control and governance. Collaboration between business lines and the IT department therefore remains essential to implement these technologies in a controlled and efficient way, taking into account the specific regulations of each sector. With implementation becoming less and less the critical point, more and more technologies are being made available in the form of ready-to-deploy platforms (not to say ready-to-use in certain cases).
On the other hand, it is true that roles and modalities must be adapted. Lines of business should share, or even contribute to, their organization’s technological trajectory, while IT departments should focus on managing the selection and lifecycle of technologies and their uses, including their adoption by users . Its implementation is often no longer the critical point, more and more technologies are made available in the form of platforms ready for deployment (not to say ready for use in certain cases).
The regulations made no mistakes: the European regulation on digital operational resilience in the financial sector (DORA – Digital Operational Resilience Act), recognizes both the importance of the financial services industry and the criticality of technology in this sector. It therefore aims to supervise and ensure the controlled and governed use of technology in banks, insurance companies and asset managers. This legislation perfectly illustrates the importance of IT teams maintaining control of the IT tool, whatever its use within the company.
Everyone agrees on positioning financial services as one of the sectors with the greatest potential. From an industry that follows closely – conditioned, it should be said, by a rigorous regulatory framework, reflecting the sensitivity of its activity – whose digital transformation is underway, it is at the forefront! New technologies are no longer just a response to transformation needs; in many ways, they are the very essence of transformation.
New technologies are no longer just a response to transformation needs; in many ways, they are the very essence of transformation. As such, the enterprise must be rethought around technology and redefined roles and responsibilities, especially between the business and IT departments. This is particularly the case in the financial services sector where technology is at the same time: a lever for development and strategic differentiation vis-à-vis the competition, an essential element of customer satisfaction and a factor in controlling management costs. Generative AI, which puts technology within everyone’s reach, opens up an incredible range of possibilities for pushing the limits of innovation and creativity.