Many financial services firms have a hard time coming up with new ideas as the financial services industry trends in 2022 are changing. With ever-increasing regulatory and compliance responsibilities, it’s no surprise that 90 percent of senior executives agree they don’t put a major focus on breakthrough or radical innovation.
In addition, the financial sector is more inward-looking, with leaders preferring to seek inspiration from other financial services organizations rather than researching outside ideas.
While this is reasonable, it is a dangerous situation to be in. Customer expectations are rising, and new competitors are emerging, thus ignoring innovation may get incumbent companies through the next few years, but it is not a long-term investment management plan.
The major step in becoming an innovation leader is to examine the digital possibilities in depth. See how AI in finance and accounting is shifting business processes and why deep learning in finance is more important than ever?
Given the difficulties of legacy IT systems, this is not straightforward, but many major banks and insurers have utilized digital to innovate and realized its potential to reduce costs and better respond to client requests.
What does innovation mean for Australian financial services?
Given the Financial Services Industry’s significant contribution to Australia’s current and future prosperity, any disruptions and opportunities for growth should be carefully considered. The authors of this report have distilled these conclusions down to what matters most to Australia using data from the World Economic Forum.
They’ve also looked into how incumbents in the Australian financial services market might react to the impact of innovation. Moreover, how the firms will respond to the financial services industry growth is also a significant consideration.
The broader impact on Australia
The significant stakeholders that could have a huge impact on 11 clusters of innovation are to be considered to help us comprehend the broader consequences for Australia. The six key stakeholder groups are as follows:
Stakeholders:
Customers are the main entity. Therefore, consumer behavior demands these innovations and opportunities – adding to the more risks and considerations.
Everything is going digital, but it also attracts new kinds of criminal activities and therefore demands the corresponding scrutiny from regulators and government agencies.
Innovation will necessitate smart, adaptive policy and regulatory responses to protect Australian consumers and businesses.
FinTech is thriving, and international entrants are drawn to Australia’s financial services market because of its profitability. Incumbents will want to collaborate as well as defend themselves.
The 11 innovation clusters will be delivered in part by large multinational technology suppliers.
Existing business models will be scrutinized more than they have been for decades as a result of severe upheavals.
As the analysts called each of the Australian financial institutions that might respond to these changes through:
- Strategic decisions
- Operating models and
- Ecosystem behaviors.
This is a framework for gaining future market share and expanding services by taking the right measures at the right time, depending on each specific business.
Bottom Line
Creating innovative techniques in the financial services sector faces significant practical and cultural hurdles. Companies that properly embrace the innovation challenge will build long-term firms that can successfully meet the demands of a more competitive future.
You may need to explore more ways to incorporate machine learning into banking or other AI applications. The bottom line is that innovation is inevitable, so better become ready for it now.
However, we will continue this report to further understand the different impacts of innovation on multiple market activities. In the next parts, we will also shed light on AI in finance examples and machine learning in finance examples. So, you will have enough to understand it better and face the challenges accordingly.
