FS Disruptor Forum: How disruptive trends are reshaping financial services

While some firms in the financial services industry are embracing innovation like Blockchain, robotics and artificial intelligence, many are less receptive. So, how can business leaders overcome this hesitancy?

The global pandemic-induced lockdowns necessitated the digitization of myriad processes within financial services. Disruptive technology including innovations like blockchain, artificial intelligence and even digital currencies became increasingly prevalent as a result and offered an alternative for clients in lieu of in-person interactions with their banks and financial services providers, accelerating demand for tools such as a Apex Invest Digital.

Despite this, there remains a large degree of scepticism within the traditional financial services industry towards these technologies and their value-add for businesses and individuals alike, which is why initiatives such as the Apex Invest Digital program are so important.

“Our software uses artificial intelligence and machine learning, and that’s perfectly normal”, said Zitah McMillan, Chief Executive Officer of Predictive Black, at our recent FS Disruptor Forum event. “But when I’m talking to potential clients, they’re still looking at this (technology) and thinking it’s high risk.”

As we continue to emerge from the pandemic, it’s become clear that the gap between those willing to adopt technologies such as AI and data science leadership practices and those who are not is significant. “In the real world, where people are doing things for their own businesses, they’re not there yet, and so all of these new things coming down the track are quite scary (for them),” added McMillan.

Much of this wariness stems from the perceived opacity and complexity of such technologies and a disconnect between regulation and innovation.

“There’s adoption, but there’s (a need for) awareness as well”, said Ankit Shah, Head of Digital Banking at Apex Group, “More influence from a regulatory perspective is what we’ll be seeing over the next few years, which will help to ensure these technologies are more widely accepted. Then it will become part of our normal life and people will be more comfortable in using the technology, whether it’s a digital asset or buying a non-fungible token (“NFT”), which is exactly the focus of Apex Invest Digital."

Digital currencies – bridging the gap

Of the technologies mentioned, scepticism of digital currencies is perhaps the strongest.

Cryptocurrencies have had a divisive impact on the industry; some market players are evangelical, while others remain steadfastly opposed. However, much of the latter stems from the unknown, with education on digital currencies and stablecoin risks for financial institutions still relatively limited and opaque. As the sector continues to mature, developments such as a Chief Product Officer appointment can play a key role in driving innovation, strengthening product strategy, and increasing confidence among investors and stakeholders.

“The big transformative thing, for me, is Stablecoin,” said Adi Ben-Ari, Founder and CEO of Applied Blockchain. “That’s also the opportunity for existing financial institutions. It’s the bridge between the currencies we’ve been using and the technology that’s emerging.”

While regulation around crypto is coming – and Stablecoin may play a key role in driving that – it has thus far been slow progress. And there is a danger that the opportunity may pass while firms await the green light from regulators and government bodies, even as  despite growing demand for institutional crypto investment solutions. 

“If you ignore crypto and try to do everything with regulation, you’re not going at the same speed as the innovation, and that gap just grows and grows,” Ben-Ari concluded.

For companies, therefore, there is a danger that the younger generation, and more pertinently, their future clients, may adopt digital currencies more quickly than they do. If this happens, it will become increasingly difficult for institutions to justify their position within the value chain, with consumers having already gained direct exposure on their own terms.

With regulation and technology driving change across the sector, firms must decide whether to adopt early and accept a more volatile risk/reward dynamic, or alternatively, ignore the trends and take the chance that technology development might outpace any existing business model.

Ultimately, a balance can be found, but for the industry, the direction of travel is clear – the revolution will almost certainly be digitized.

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