With the current Covid-19 pandemic, the disruption to public places and workspaces is clearly an event that will punctuate the status quo. It appears ready to usher in a new wave of fintech infrastructure. While financial technology infrastructure has been a growing feature of the marketplace over the past 20 years, it has proliferated largely as add-ons to existing processes. New applications and services have been layered over old bones without overhauling or replacing underlying systems.
However, given the onset of new social distancing measures and work from home policies, we are all interacting in different ways. We are seeing a forced shift to digital communications, in ways of working, commerce, account management, and more, and this has rapidly changed how people wish and expect to interact with their banks and credit card companies, as well as how they want to pay for products. In a recent Broadridge BR survey, 60 percent of financial services executives said they will enhance multi-channel client communications as a result of the pandemic. While digital adoption was an option before, it is now an absolute necessity demanding a new level of commitment.
Furthermore, financial services firms will have to reassess their technology infrastructure as part of a long-term assessment of underlying workplace processes and examine how they can be adapted for the new era. Resilience, scalability, and redundancy are all the more important in light of the Covid-19 crisis. Financial technology firms will need to ensure that middle- and back-office technologies can efficiently and reliably support the transformative changes being made to the more visible application layers. Unlike conditions at the end of the 2008 global financial crisis, current financial services firms tend to be financially stronger, making them well positioned to become leaders in the new post-pandemic environment.
Some areas within financial technology infrastructure are particularly ripe for development. The combined stresses of financial and physical health have intensified consumer behavior, resulting in increased transactional activity and on-demand access to information across all their accounts. These capabilities tend to be dependent on core back-office infrastructure and require a shift in methodology from batch processing to servicing requests in real-time as well as the ability to consolidate data from multiple sources. A push for this kind of instantaneous, current information is spurring the evolution from batch-oriented processing toward real-time access and increasing use of APIs.
The cloud also presents an important opportunity to leverage technology. It allows mutual access to infrastructure and underlying services upon which financial services firms rely, leading to more reliable, higher-quality services. It makes it possible to scale processing power on demand. Furthermore, it improves the resiliency of business continuity plans by providing the reassurance of greater accessibility, even when on-premises servers may have been disrupted.
As the pandemic response leads to greater adoption of digital processes, these activities will generate an increasing amount of data. Financial institutions will need to adapt to how they respond proactively to customers leveraging this data and deriving new models of interaction. They can do this by using artificial intelligence to develop increasingly intelligent and customized automated responses to customer requests, as an example. Additionally, robotic process automation can increase the scalability and reduce the error rates of middle- and back-office activities that were once manual.
In Japanese, the word “crisis” is composed of two symbols – one signifying danger, the second opportunity. The frequent association of the two ideas may stem from the cycle of life and the fact that every ending is followed by a new beginning. Just seven months into this global pandemic, it is still the beginning of a new paradigm. Fintechs and institutions would be wise to follow the wisdom of America’s first billionaire, John D. Rockefeller: “I always tried to turn every disaster into an opportunity.”
While some financial services companies may struggle to make the transition, those able to quickly adapt to the new normal and dive into the opportunities will go through a process of punctuated equilibrium, emerging stronger after the pandemic wanes.
This article was written by Michael Tae from Forbes and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to [email protected]