Digitization has been widespread across industries for years now, but some have been more active than others with respect to proactive and comprehensive transformations of operational processes. The fact remains that consumers are driving these changes both within the workplace and outside of it, as more individuals begin to demand access to highly digitized services and Web-based platforms for core needs such as account management.
One of the best examples of a sector in the process of massive change is financial services, which has had to remain highly agile given the rapid and dramatic intensification of several trends, including mobile payment processing and online banking. At the same time, security has been a perpetual concern in this arena, and enterprises have had to ensure that they are deploying new technologies and handling modern management requirements properly to avoid financial loss.
Earlier this month, Gartner forecast mature markets to experience heavy increases in smartphone and wearable device payments in the coming years, with an estimated 50 percent of consumers therein using these gadgets for transactions by 2018.
"Innovation in apps, mobile devices and mobile services are impacting traditional business models, particularly in the way people use personal technology for productivity and pleasure," Amanda Sabia, principal research analyst at Gartner, mused. "Product managers must understand who their customers are for these new devices and services, and how the products are being used. Knowing your customer is imperative in order to capture a fair share of spending opportunities in this dynamic marketplace."
If you would like a comprehensive rundown of some of the more important technologies to watch in this sector, check out this Sibos TV video that includes a forum on the trends gaining traction:
Now, keeping in mind that mobile payment processing is just one of the movements gaining steam in the modern financial services sector, decision-makers need to be thinking strategically when designing their IT plans. A new report indicated that several common focuses have begun to sprout up with respect to spending on technology in the sector, and these trends will likely have an immense impact on the consumer experience before long.
International Data Corporation recently released its latest study on IT spending trends and behaviors in the financial services sector, estimating that the industry, globally, will spend around $455 billion on technology this year. However, the analysts really focused on where the money is going, and found that the sector as a whole put roughly 25 percent of companies' collective technology budgets into three core areas - big data, mobility and the cloud.
This is not all that surprising considering how popular these technologies have become in the past several years, but shows where leaders in the industry are placing their chips with respect to future strategies and initiatives. Cloud computing continues to act as a foundation for big data, mobility, unified communications and more, and will almost certainly remain at the top of the list for years to come given the perpetual demand for more agile computing power.
"The advance of the 3rd Platform and its four pillars - mobility, cloud, big data and analytics (BDA), and social business - has caused a fundamental shift in how financial services companies are consuming and budgeting for IT and applications. Furthermore, the 3rd Platform is creating the most significant opportunities for financial institutions in decades," Karen Massey, a senior research analyst for IDC Financial Insights, stated. "Financial institutions are increasingly leveraging these four pillars to transform their businesses, with a keen focus on three of the pillars - mobility, cloud and BDA."
The researchers also explained that cloud, mobility and big data will actually continue to take up a higher rate of overall spending as the years progress, reaching a predicted 30 percent by 2019. Diving a bit more closely to the specifics, IDC argued that mobility spending will be most focused on data plans and enterprise services, software, hardware, and management solutions.
Cloud expenditures are expected to remain split between infrastructure, platform and software, while investments into big data are diversifying a bit as companies try to get the processing capabilities and backend systems necessary to support the tools. The fact remains that companies will struggle to remain competitive today and in the coming years should they not quickly embrace these technologies, especially considering the rising tide of demand among consumers and corporate purchasers.
"Small businesses have their work cut out for them."
The right approach
Small businesses operating in the financial services sector have their work cut out for them, as legislative overhauls, increased risk of data breach, more complex IT needs and economic turbulence can all act as common disrupters. In many situations, entrepreneurs' firms will have a more difficult path toward total IT and operational digitization due to smaller technology departments and budgets, as well as fewer highly experienced professionals on hand.
This is why managed services might be invaluable in the coming years, especially for novel technologies such as cloud computing, big data and mobility. Entrepreneurs will always want to look for such a vendor that will be able to assist with a range of needs, including regulatory compliance support and security guidance. Virtually every new trend that enters the financial services sector will present risks and rewards, and managed services can help tilt outcomes in adopters' favor.
There are no signs that banking sector best practices are going to stop evolving and transforming any time soon, which means that now is the time to diligently plan out future strategies for success and continuity down the line. Mobility, the cloud, modern payment processing, Web portal management and other matters have been around for a while now, and need to be ironed out and optimized to make way for the next era of competition.
Putting in the effort to modernize and digitize the business, all the while maintaining smart decision-making in the provisioning process, can go a long way toward bolstering the average organization's bottom line.