As 2023 advances - these six pivotal areas outlined by Sudhir Pai (Cap Gemini) have already set the stage for and impact the now rapidly evolving sector:
1) Balancing Digitization With Evolving Risks And Sustainability
Going beyond digital has become front and centre for many leading financial services organisations - Environmental, Social & Governance (ESG) factors are increasingly influencing consumers decisions. The recent banking run in the USA (SVB) and Europe (Credit Suisse) have been stark reminders that risk management needs to be the no.1 priority at banking and insurance firms - focusing on accountability and responsibility as well as a revamped risk strategy with greater investment in data, infrastructure, reporting capabilities and compliance.
2) New Levers For Operational Efficiencies
With economic downturn becoming a reality, most firms in the finance sector have shifted their focus to cost transformation. Levers for cost transformation such as product rationalisation, IT modernization and the hybrid workforce that can be measured through business outcomes other than just cost savings.
3) Shaping The Future Of Regulated Markets
Decentralization powered by digital assets and tokens is on the verge of transforming the financial ecosystem. In the coming years we will see all major players in the financial services sector investing in bridging the gaps between decentralised finance and traditional finance to unlock business value.
4) From Open Banking To Open Finance
Regulators across the world have been backing open banking initiatives that could build healthy competition in the market, benefiting end customers. With the transparency that open banking provides, banks are encouraged to offer digital services, fair pricing and increased security. Open finance is the next step in the evolution of open banking. Open finance should open up data sharing for new cross-industry business models beyond just banking products and services.
5) Instant, Frictionless And Interoperable Cross-Border Payments
As more silos of token networks emerge, opportunities for interoperability are growing through country-specific CBDCs, stablecoin and digital assets.
6) The Expansion Of The Regulatory Compliance And Reporting Solutions Market
As financial crimes and money laundering methodologies keep pace with advances in technology, financial institutions will need dedicated solutions to ensure they are aligned with their regulatory environments and are able to stop the misuse of their services.
