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Early in 2018, cryptocurrency was the next big thing in financial services, with investments reaching $800bn up from just $18bn the previous year. Fast forward to 2019, and suddenly there is talk of crypto being “dead.” According to a recent report from Anaplan which spoke to leaders across the US and UK in the financial services industry, cryptocurrency is not even expected to be one of the top three most disruptive forces in financial services over the next five years. Instead, regulation and compliance ranked as the top concern for the financial services industry.
The growing concerns around regulation can be directly tied to the General Data Protection Regulation (GDPR), Brexit and the ongoing trade tensions between the US and China. In just the past several months we have seen major companies struggle with GDPR compliance, Fidelity released a report indicating that nearly half of the top US financial executives are less optimistic heading into 2019 due to the US and China trade tensions and Brexit causing major banks to flee London in search of new European hubs.
When you factor in the other top disruptors highlighted by the research: cybersecurity, artificial intelligence and payments technology; it’s clear that financial service providers are facing a chaotic storm of threats to mitigate, external factors to manage and new developments to facilitate. This all adds up to a testing ecosystem full of uncertainty, but also one that is brimming with opportunity for businesses able to navigate the period well and understand the environment that surrounds them. Now more than ever, financial service providers need a fluid plan that covers all eventualities and possibilities, so they can manage uncertainty, adapt to change and transform business processes quickly.
Remaining calm amid regulation and uncertainty
Between tariffs from trade disputes, the political uncertainty surrounding Brexit and the risk of heavy penalties for not complying with privacy laws, it’s no surprise that the research also found that 45 percent of respondents see regulation as the largest potential disruptor to their business over the next five years. Google, for example, was fined by the French data regulator for a breach of the EU’s data protection rules, but these challenges can be overcome.
Focusing on compliance amid an ever-changing political landscape, is exactly where technology and data have the power to transform – helping to tackle much of the complexity involved in achieving compliance while still delivering instant access to the precise information needed to plan effectively. With the right systems in place, organizations can quickly connect and verify different data sources, while breaking down silos to gain a much clearer view of what lies ahead.
Planning for all possibilities
As is often the case in business, it’s not just the anticipated challenges that we need to plan for. Our research found that only 11 percent of financial services decision makers feel worried about the challenge from start-ups over the next five years, but lower barriers to market entry have given the green light to a host of new upstarts across the industry. From fintech companies providing loans and payments, to the tech-behemoths of Amazon and Apple entering the space, everyone is fighting for a piece of the financial services market pie and providing challenges to the traditional industry players.
Organizations must ensure they don’t get complacent and take their eyes off the ball. Disruption can come from anywhere and at rapid speed. Companies need to ensure they are planning for every scenario and continuously asking themselves if they’re truly getting the most out of their data. With effective planning and solid forecasting, financial service providers can unlock opportunities, get closer to customers and inform better decision making - from new appointments to investments. Having a connected approach to planning and forecasting across the business will provide the insight to face the challenges and disruptions that shape the industry.
It’s all about being able to move quickly and having access to critical data, which will reduce the impact of uncertainty and build realistic, actionable responses to the universe of possibilities. If financial service organizations can learn anything from the myriad of changes in the market over the past year, it’s that they have to be prepared for everything.
Ian Stone is the CEO of Vuealta.