The digital revolution is well underway, and one sector moving quickly to embrace new, technology-driven ways of doing business is Financial Services. Capco recently launched its U.S. digital practice to support financial institutions undergoing digital transformations, helping them leverage innovative technology to disrupt their businesses in a positive way. Consulting sat down with Capco’s Nic Parmaksizian, Global Head of Capco Digital, to talk about the challenges and opportunities Financial Services firms are facing in light of the digitization of the industry.
Consulting: What’s behind the timing of the launch of Capco’s US digital practice?
Parmaksizian: The US market is quite clearly accelerating its investment in terms of digital technology and digitization. When you look at the size of the market and the actual global demand, the US outstrips other parts of the world when it comes to demand and needs for those types of services. We’ve always worked in digital in the US, I think it’s more of a question of acceleration and leveraging my own and my team’s experience, assets, experiences, and capabilities we’ve developed. In my mind, there’s a difference in parts of the banking sector in maturity between the UK and some US banks. Perhaps the UK banks have been more proactive in investing a bit more and earlier in terms of digital transformation. What we’re seeing is some catching up happening. That’s what’s motivated our investing more in this space at Capco.
Consulting: What are some of the most disruptive technologies you’re seeing in financial services?
Parmaksizian: The artificial intelligence space is giving our clients an opportunity to rethink automation. Automation isn’t something new, but it’s something that hasn’t necessarily been done right in the past. What we saw happening was a lot of value being destroyed by automating blindly. What’s happening with AI is you’re really needing to think through the use cases and where to best deploy the technology. I think it’s offering efficiencies but also helping reinvent the way organizations interact. It’s also giving the the opportunity to be more progressive when it comes to transaction monitoring and the compliance space. Blockchain is obviously another area that has been studied by our clients for a number of years, the actual embrace of Blockchain at scale across industries has obviously yet to be seen, but when that happens it will be very disruptive.
Consulting: What are some of the big challenges being faced in Europe vs. the US in terms of digital transformation?
Parmaksizian: The number one challenge around culture is common across both regions is really getting the right culture to embrace design thinking, embracing agile ways of working, being more collaborative, creating organizations that are more empowered to be able to drive change, creating the environment that supports innovation where nobody’s afraid of failing. That’s common to both markets. Another is around talent management and being able to attract the next generation of digital talent. There’s been a history of automation of the actual digitization of core processes in the US, but we haven’t necessarily had that in Europe. I think part of the reason is in the UK and other parts of Europe there’s been a history of aggressive outsourcing and offshoring of some of those processes to low-cost locations, whereas in the US to get the same kind of efficiencies the banks have been more proactive in trying to invest in the digitization of some of those processes and functions. I think Europe needs to catch up in that space. On the other hand, we’ve seen a lot more disruption and innovation in the client experience in Europe, reinventing the way banking organizations engage with the end customer. I think the Tier 1 banks in the US have done quite a bit of investment around that, but I think Tier 2 banks have yet to catch up, and that’s a big opportunity.
Consulting: What are the big consulting opportunities around digital transformation of financial services?
Parmaksizian: When we think of digital and digitization we usually think about technology and solutions. I think that’s often where things have gone wrong in the past, whereby banks have invested a lot of money riding on the back of the latest technology or trend without necessarily thinking about the purpose and need behind it. Without having necessarily defined specific use cases. In my mind, the greatest opportunity is around really creating and embracing that design culture to be not just rushing into problem solving and introducing new technologies but forgetting why you’re doing what you’re doing in the first place. So spending more time around figuring out what your needs are, framing the problem, framing the opportunity, while trying things and testing things very quickly. That’s one area our clients’ organizations are needing help to really make that transition from a sequential, problem solving, engineering-led type culture to more one of try-and-fail, creative design-led type of culture.
Consulting: How close are we to seeing what the next generation of financial services will look like?
Parmaksizian: I think it’s continuously changing. There is constant innovation and change we’re seeing between some of the non-financial services brands moving into that space through partnerships, which is very interesting. The way technology is changing how consumers interact with their banks, essentially the role of money, and how the banks are approaching money is changing. The continuous change makes things very exciting, and the constant wave of innovation and really trying to look for additional value generation, this constant quest for differentiation through innovation is really what’s going to continue to make this industry very exciting and interesting.
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