Financial services: Succeeding in 2023 (and beyond)
The financial services sector is a core element of every modern economy. Every institution you can think of is dependent on financial services, from corporations to governments. It’s at the heart of how we plan our own futures, from the growth of our businesses to how we best enjoy the rewards of our hard work, right now and in retirement.
The crucial nature of financial services is one reason we are optimistic about growth in 2023 and beyond. The second reason is technology. While many CEOs see tech as a complicating factor, or perhaps a necessary evil, the wisest leaders are using it to drive growth and simplify their customers’ lives.
Of course we can’t downplay the enormity of the current challenges. In a few short weeks, the pandemic changed nearly everything about doing business, from where and how we work to supply chains and global markets. As individuals, we’ve gone from office-bound to home-bound quite literally overnight, with all the joys and stresses that implies. Globally, of course, markets are volatile, supply chains have been interrupted, and the very order is realigning.
These challenges are shared by mid-market firms and the biggest international banks. But in the mid-market, obviously, resources are scarcer. They don’t enjoy the same deep pockets or economies of scale. Nor can they afford to invest the same in expertise. Fidelity Investments reportedly spends $2.5B per year on technology and employs some 12,000 ‘technologists’.
Such numbers may seem daunting to mid-market CEOs. And while we understand their apprehension, we see a way forward. The fact is that many longstanding challenges in the financial services sector have an upside—and they are often easier to address in mid-market companies.
Integration. Financial service businesses are often hampered by unnecessary complexity, such as multiple systems that can’t talk to each other, requiring tedious and demoralizing labour from staff. The mid-market companies that streamline their systems and processes—improve integration with outsourcers, increase the accuracy and availability of information, and automate decisioning—will gain a clear advantage over competitors.
Compliance. There is nothing new about legal requirements. Although they have become more complicated, that just means even more opportunities for companies who do compliance well, and for companies offering compliance consulting and services.
Digital channels. COVID has only accelerated what was already happening, from contactless payments to securing a business loan online. Some used to scoff at the idea of selling pension plans or insurance policies via Zoom; now it seems perfectly sensible to vendors and clients. Ten years of behavioural change have been compressed into ten weeks.
Disruption. In this maelstrom, retail banks with long and proud histories may be swept aside by new entrants like Atom Bank or Monzo. If and when Amazon, Google and Apple get into financial services, the old corporate giants may topple. However, we still see room for nimbler mid-market companies that can compete on price or combine a range of services with a personal touch.
In the meantime, see our Cyber Security and Compliance Knowledge Centre
The ultimate question for mid-market financial services businesses is quite simple: Given all the uncertainty, how do we maximise the opportunities?
In the coming weeks, we’ll be addressing this question with a series especially written for the CEOs of mid-market financial services companies. The topics include:
- Security and compliance
- Back Office Streamlining
- Disruption and New Digital Customer Experience
- Video and Audio Discussion on Financial Services
The series will help you identify the threats and opportunities in the coming year, and how to get started on minimising the former and maximising the latter. Above all, we aim to demonstrate that while there are serious challenges in the mid-market space, with the right technological strategies, they are more than manageable, and that there is room for mid-market players to grow in 2023 and beyond.