IndustriesBanking & Insurance

Intensity: The Word of the Year in Financial Services

2014 Market Drivers & Predictions – as our car door mirrors used to say: “Images shown are larger than they appear.” Similarly in the financial services industry (FSI), we see some familiar trends moving into the new year. But their intensity is much larger than many realize.

The Current Environment – Market Revival

Economic revival and growth mark the road we see developing ahead for Financial Services. Arguably we’re still in a delicate state globally, but all key indicators point to a market recovery.

With this market revival comes a unique set of requirements. Not necessarily new ones, but certainly requirements with a greater focus and intensity. The unrelenting drive to acquire and retain customers, increase share of wallet and regulatory compliance continues to remain top of mind. So too does the insatiable desire to reduce costs and increase profitability.

Unfortunately, as banks and insurers execute their expansion plans, they’re putting tremendous strain on existing IT & service infrastructures and associated business operating models. The strain only becomes more intense as the growth and competitive forces accelerate.

Given these market forces moving into 2014, we should see three key outcomes take place:

1)  Automating Compliance – Moving to the Next Generation of Information Governance

We’ll see an increasing use of automation to address compliance and escape regulatory fines, lengthy audits, and reputational risk. In 2014, the volume, complexity, and pace of change of regulations will be greater than in previous years.  Scrutiny on decision-making, regulatory reporting, and compliance readiness in FSI will be – in a word – “intense.”

Consequently, there’s an immediate need to automatically collect all relevant regulatory policies (globally, regionally & locally), analyze information risk across all content across the enterprise, and enforce the right management policies on a continuous basis – going well beyond traditional records/retention management.  Interest and adoption will be fueled by the promise of saving literally millions of dollars in reduced fines and operational costs.

2)  Big Data – Accelerated Adoption via Proven Results

The well-publicized Big Data trend will evolve from theory and hype to broad adoption, steeped in proven business results.

Insurers are already up-selling policies, by noticing when household teenagers reach driving age and other life events, as well as providing dynamic policy pricing via telematics. Banks are also now introducing rewards programs based on spending patterns and other insights. The use of big data will accelerate as it becomes ingrained in core transactional applications making it a business and competitive necessity.

3)  Modernizing the IT infrastructure – Becomes A Business Imperative

Throughout 2013, we’ve witnessed ATM networks going down, credit card data compromised, and extreme transaction delays – most during peak seasons. This has given the industry a rude wake-up call: you simply can’t delay IT improvements a second longer; the infrastructure has reached its breaking point!

Thus, we’ll see an increase in core infrastructure investments, both in off-the-shelf packaged applications, digitization of business processes, mobility and cloud solutions. Similar to Big Data, we’ll see a dramatic transition from exploratory moves to organizations placing bigger bets on cloud offerings. Granted, the pace and scale of this transition will differ by sector within FSI. However, few will resist the allure of substantial cost savings and rapid delivery of new products and services to a demanding and competitive market.

Also, a new standard for engaging customers will emerge – one that’s collaborative, mobile-aware, and highly personalized. Gracefully welcoming customers and seamlessly connecting them to core business processes, will eliminate traditional sources of customer frustration and provide the next product/service differentiator.  Consequently, organizations will aggressively seek ways to easily and securely sync & share sensitive information between customers, approved agents and other third parties – anytime, anywhere, with any device.

Lastly, the need for rapid transformation will drive demand to quickly and safely decommission legacy applications, while protecting sensitive data.

All told, proven cost savings, risk mitigation and time to value will accelerate investment in these modernization efforts.

Arguably, we’ve just scratched the surface for what we can expect in 2014.

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OpenText is the leader in Enterprise Information Management (EIM). Our EIM products enable businesses to grow faster, lower operational costs, and reduce information governance and security risks by improving business insight, impact and process speed.

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