Over the past decade, two significant shifts have occurred in businesses developing and launching digital technologies. The first change relates to the consumerisation of IT. In previous studies, Gartner stated that consumerisation represented one of the major trends likely to impact the IT industry in the coming years. After the demise of the dot.com era, IT budgets declined, and companies began focusing on larger consumer IT markets. This shift altered how technology entered the marketplace, including the finance industry. 

Rather than innovation entering businesses and passing on customers, the customer market would adopt new tech before enterprises. The second significant change has been the rise of digital talent in the workforce and the demand that the corporate technology experience matches the customer-based requirements. People are less reluctant to differentiate between corporate and personal technology or depend on challenging enterprise tools when consumer software is more flexible and effective. The rise of remote working has accelerated this shift, with workers looking to take more ownership of where and how they work.

Rising customer and employee expectations

All of these changes have accelerated the expectations of results from technology for both customers and employees. In society today, customers have very little tolerance for waiting or potential disruption. Customers expect transactions and related processes to be as simple and seamless as possible and are likely deterred by a service if this isn’t the case. With higher expectations for customer experience, flexibility and rapid deployment of new services are a significant part of a leading business.

The finance industry has been impacted by the rise of fintech companies which dedicate themselves to data and are free of legacy systems and the barrier attached to established banks. Utilising modern services and products related to cloud-native technologies, fintech companies have scaled without the high IT infrastructure and development costs often linked with traditional software development. 

The consistent performance of a cloud-native environment can only happen if the data on which everything is dependent is adequately protected. Any data breaches can result in massive disruption to service. For example, a ransomware attack on Travelex disrupted the business for months, resulting in customers having no access to foreign currency and eventually drove the company into administration. In the move to integrate cloud-native technologies and modern software, practical considerations about resilience and data protection often are pushed aside. For the finance industry, with many regulations and policies, disregarding data protection should not happen. Inadequate data can spell disaster for the digital transformation plans for many fintechs. According to the Veeam Data Protection Trends Report 2022, about 90% of IT leaders within finance confessed to a protection gap between how much data they could lose after an outage and how often their data is stored.

With applications and data spread across physical, virtual and cloud environments, and given the sensitive nature of the financial information stored by fintech companies, infrastructure vulnerabilities and data breaches must be removed. The way IT supports our modern world has changed significantly. New cloud-native applications and microservices are reducing software development timeframes, enabling more innovation and focusing on meeting shifting customer demands. Implementing a data protection solution capable of working across these different environments is essential. With this, fintechs can ensure they can reactivate applications and protect their business and customers against cyber attacks.

Instead of highlighting the competitive landscape between emerging fintech and traditional banks, there is the potential to collaborate and generate more value. The fintech industry is accelerating innovation in finance industry, but many startups’ progress is hindered by strict regulations, data privacy and security concerns. Many traditional banking institutions are beginning to partner with fintech companies to expand and accelerate their digital plans.

The digital drive is forcing established banks to move from legacy systems to innovative solutions. It’s unlikely that fintech companies can take the stronghold of the market, but traditional banks will have to determine whether they decide to introduce their solutions or partner with fintech companies to maintain the edge over other competitors. If customer expectations continue to rise and demand the types of products and services offered by fintech startups, incumbent finance companies will have to find a solution to deliver new products or collaborate with those that can.

How fintech represents innovation in business

The rise of fintech has caused many finance leaders to adapt their core focus concerning data and digital platforms, utilising data and new services to enhance efficiency and security. Open-source software, SaaS and other architecture have become critical for tech and finance organisations exploring fintech services.

Technological progression and innovation are critical parts of fintech development, and they will likely continue to disrupt business activities within the financial industry. Many traditional finance businesses have been encouraged to be more creative as fintech companies promote new and innovative digital features and continue to gain further popularity across the financial industry.

Fintech represents innovation and is why many traditional finance companies struggle to maintain pace with new trends continuing to disrupt the industry. While fintech companies have the agility and a customer-focused approach to deliver more flexible solutions and a better user experience, the traditional banks have the size and experience, which translates into consumer confidence. Fintech expertise is often used by finance companies to improve and automate procedures and create detailed insights into their clients.

The range of fintech developments has expanded to payments and investing in new business models like blockchain, insurance-tech and data-driven marketing. The finance industry is experiencing a significant transformation on a large scale, predominantly due to technology: cloud computing, big data, robotics and artificial intelligence, and the shift in virtual and open banking and fintech. Product and software management, cyber security, customer experience, and data analytics are skills required not by just the fintech industry but also by any technology business.

There are many benefits that could transpire from a partnership between corporates and fintech. The integration of technology and greater access to data generate better compliance, security and lower privacy risks. Open banking enables third parties to create products and services around the offerings of a financial business. This collaboration would extend the potential of ecosystem-based finance, where banks and other finance companies can work with non-financial companies to create a seamless customer experience.

Finance integration has been a growing trend in the last year, with many finance companies looking to be providers to non-banks and non-financial groups looking to deliver a customer experience or service involving financial products as part of their offering. As the demand for rapid financial transactions has increased, banks and other financial businesses have been integrating fintech products within their standard practices. The ultimate purpose of fintech, aside from its focus on innovation, is to adopt technology to provide customers with financial requirements and deliver the best experience.
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Education and Business schools are trying to tackle the rising demands from new finance and other technology-focused market influencers.

Innovation in the tech industry has been disrupting finance for many years resulting in many of the new fintech companies becoming mainstream. Fintech venture funding has accelerated significantly in the last year and caused a spike in new job opportunities. New businesses, invest-tech companies and other neobanks are emerging in financial hubs worldwide. Studies show that leading tech innovators such as Revolut and Stripe appeal to many job seekers. For example, Revolut received over 250,000 applications during Q1 this year for 576 open positions. This number equates to well over 430 applications per job. Fintech companies like Revolut are actively looking for graduate talent worldwide.

The interest in fintech has left universities and other business schools racing to maintain a grasp of the skills and competencies required to fill these roles. Some schools are introducing specialist fintech degrees to attract and train the next-gen of fintech talent. For example, New York University Stern School of Business is launching a one year Master of Science in Fintech. The program will include data programming, blockchain, machine learning in finance and fintech leadership. Course representatives explain that the curriculum ensures people are prepared with the most relevant skills and tools to become instant disrupters in the fintech industry.

Some recruiters believe it isn’t all about finding candidates with fintech-related degrees. Some agencies prefer to recruit people based on their technical background or qualifications. For non-tech roles, people could potentially join with different skills. From a technical perspective, the skills required for new positions are evolving very quickly. Career industry specialists recommend acquiring a good understanding of blockchain, data science and cyber security as critical areas that set you apart from the competition. Continued learning and exploring the latest developments in fintech is vital to maintaining your competitive edge.

Fintech employers are also looking for technology talent in other fields like payments technology, data analytics and user experience. Finance business experts highlight that an understanding of the financial industry continues to be very important. Fintech employers are seeking professionals with a background in the traditional finance industry, including knowledge in risk analysis and business development, but have the potential to learn new skills virtually. Business schools could support the requirements in fintech by capitalising on this knowledge gap. There is an opportunity to assist people from tech backgrounds to gain a deeper understanding of the financial industry with a dedicated fintech for tech professionals programme. There are very few people in fintech that are capable of excelling in both finance and technology.

The ideal graduate is somebody that appreciates business and technology, and this can be hard to find. There is rising demand for individuals that can programme in multiple languages, but at the same time, graduates with skills in economics and user behaviours are also very important. The focus is now on shaping graduates with broader skills across these areas. Fintech businesses want graduates with strong communication skills and are capable of working confidently with other industry professionals, whether this is in finance or an engineering discipline. The single, most important attribute boils down to their ability to problem-solve. Candidates that can show critical thinking and problem-solving skills are highly desirable. Candidates may be technically capable and have the experience, but if they are difficult to manage or lack the communication skills, then this person may not be a good match for the culture of a particular company.

Some industry experts consider data as the new oil. Just as it does for the finance industry, the rapid digitalisation of the economy comes with opportunities and challenges for financial regulators. On the positive side, new information is available, with vital insights into financial risks that regulators spend considerable time trying to understand. The abundance of data provides details on global money patterns, economic trends, onboarding decisions, noncompliance with regulations and many more critical subjects. More importantly, the data provides answers to regulators’ questions about the challenges of new technology. 

Thanks to digitalisation, regulators have the opportunity to collect and examine much more data and see more of it in real-time. The possibility for issues develops from the concern that regulators existing technology cannot harness the data. Ironically, this rise of new data is overwhelming for many companies. Without applying digital technology, the stream of new data financial regulators need to manage systems cannot be used appropriately. This challenge of managing the abundance of new data is where artificial intelligence can play an important role.

In 2019, Mark Carney, the Gov of the Bank of England, emphasised that financial regulators needed to integrate AI to maintain pace with the rising amount of data flowing into businesses. Carney highlighted that the bank received 65 billion pieces of data every year from companies it is responsible for, and examining all of this information would be overwhelming without supportive technology. In today’s world, the volume of data has only continued to increase, especially if you factor in other data sources generated from public records, news and social media channels.

AI emerged over 70 years ago, and for years AI experts predicted that it would change our lives significantly, but it has taken a long time before we have seen the impact of AI on our daily lives. It was only until recently that we discovered the signs of AI and how it could solve real-world problems. This discovery is down to having enough data available in a digitised format to justify using AI. Today, we have so much data available we can use AI, but in sectors such as finance, AI is becoming necessary to maintain pace. Financial regulators are beginning to explore how AI and similar technologies can improve their work. Businesses continue to test the potential of new technologies to monitor performance. This work is happening in the finance industry, particularly to enhance compliance systems.

Financial regulators worldwide have become more active in monitoring the use of AI rather than adopting it for their benefit. How can AI be used to improve areas of poor regulatory performance? One example has emerged from the war in Ukraine. The Russian invasion has triggered a new level of sanctions against Russian oligarchs attempting to hide their money. Financial institutions are obliged to monitor accounts and identify transactions by these sanctioned groups. If law enforcement agencies had applied AI-powered analytics to examine data from global transactions, they would be able to detect particular patterns within sanctioned groups. For the time being, however, most financial groups lack these resources. 

Another example relates to the millions of refugees and the issue of human trafficking. Banks are required to maintain anti-money laundering systems to detect and report the movement of money that could indicate human trafficking and other crimes, but many of these systems fail to be very effective. 

AI-powered compliance systems would be far more efficient at detecting these issues and significantly impact many challenges our planet faces.