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How Innovation is Impacting and Reshaping the Financial Services Industry

2023-04-06
Allen Atchley
​​​​​​​Leading strategy and innovation for Volvo Financial Services (VFS) requires the identification of emerging and disruptive trends. That means I invest a lot of time understanding what’s happening in fintech, and how it could be used to make our business and our customers’ businesses more competitive.
How Innovation is Impacting and Reshaping the Financial Services Industry

​​​​​​​And while innovation is important to remain relevant, I don’t believe companies should invest in innovation for the sake of being “forward thinking.” Getting the most out of innovation requires rigorous analysis of how the fully realized value of innovation will help position the company for success. Without a clear view of how innovation supports the business strategy, even successful innovation efforts will not have maximum impact.
 

The Impact of Innovation: Three Keys to Consider.


At VFS, we really look at innovation in a few different dimensions.

  1. Customer Experience. Innovative offerings and innovative distribution methods mean customers have more options to choose from and can spend less time dealing with financial services. Just consider the time saved with the introduction of mobile and online banking. It has simplified everything and greatly increased the range of financial services that customers can access when most convenient to them. With that said, I also want to emphasize that human-to-human contact still is important. There is a balance. Some customers really need to-- or simply like to-- deal with financial services in person. This in person experience gives us the opportunity to enhance customer relationships, an important part of customer experience that we value at VFS.

  2. Competitive advantage. One thing driving urgency in innovation for companies in the financial services arena is efficiency. If you’re not using innovation to realize gains in efficiency, you’re probably already behind. Consider the best delivery method to customers of your services, then look for technologies that make the processes driving service delivery more efficient. The savings generated can be shared with customers through lower prices that in turn make customers more competitive.

  3. Impact on Workforce. ​​​​​​​It’s important to consider how innovation impacts people working in financial services. With many routine tasks becoming automated, I believe there is an opportunity for further training and development of the workforce in the service value chain. Yes, some tasks are being replaced by automation, but it doesn’t have to mean you lose the people who performed those tasks. There are many critical roles that are not automated that require the knowledge and skills our experienced people offer. These roles can be a source of new opportunities for team members affected by automation. It is important to be committed to retention of your best people and upskill employees for new roles that create value for customers in the event automation affects existing jobs.
Allen Atchley, SVP Strategy and Innovation

The opportunities going forward for Fintech.

I get asked a lot about what’s coming and what am I watching out for that could be a game changer. I want to mention two things here: Personalization and the combination of existing technologies. 
 

Personalization.

With the increasing availability of data and gains in data processing speeds, personalization in financial services is definitely an opportunity going forward. One clear example can be seen in insurance. Insurance used to be offered using historical data based on the characteristics of a segment of customers. Increasingly, innovation in B2B insurance is allowing for the creation of more customer-specific insurance products that reflect the real-time risk and behaviors of individual customers. I expect this trend to continue as financial services firms further increase their customer insight through compliant data capture and enhanced data analytics.
 

Converging technologies: the next generation of the Internet

Another area I am following is the immense potential found in converging technologies. Specifically, I’m watching how this relates to the development of the next generation of the Internet (Generation 3) that seeks to combine blockchain, AI, augmented reality, digital currencies, edge computing and other existing technologies. This is creating a new internet infrastructure that could create many new possibilities for how financial services are selected and managed by customers. If this vision of the next generation of internet is realized, financial services companies could see as dramatic an impact on growth, efficiency, security and risk management of financial transactions as the sector realized from the first two generations of the internet. 

​​​​​​​It’s all really exciting to be part of. But I am also aware of the potential downsides. AI deployment at scale still carries unknowns. The risks could take time to appear, and unintended negative consequences may follow that could be difficult to reverse.

Ultimately, innovation in fintech is transforming the financial services industry. At VFS, we aim to accelerate reaching the aspirations contained in our business strategy through investments in innovation. Reaching these aspirations will strengthen our market position and have a positive impact on our customers’ businesses as well.

What are your thoughts? I’d be happy to answer questions or hear your perspective on this as well.

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