Putting financial services innovation into practice
February 04, 2025
Innovation has never been so critical to success in financial services. Wherever money is in motion, at rest or at work, digital solutions can help organizations win and keep customers. But digital transformation is about more than bringing banking or investment services to smartphones and modernizing the customer experience: It can be a turning point for your IT infrastructure.
Innovate or be left behind
From banking and payments to capital markets, financial services firms stand or fall on their commitment to innovation. You can’t stop refining your systems and processes if you want to stay ahead. And if you don’t make the most of the latest technology, you run the risk of being left behind for good.
Technology has become the industry’s greatest enabler: a more dependable means your firm has of becoming more efficient, more appealing, more secure and more competitive.
At its most innovative and transformative, technology also brings its own risks that you’ll want to manage carefully. We’ll come to those later. But standing still may be even riskier if you want to set your organization apart by providing the richest experiences, the deepest insights and the best products and services.
Whether customers or employees, your platform and portal users expect instant interactions with your business like they have with other online retailers, news outlets and search engines. They expect real-time processes, not batch cycles, around the clock. And they expect automation, speed and efficiency at scale, without compromising accuracy or security.
Managing all these expectations is a tall order for any financial services operation, and only the very latest digital technology can deliver.
How to innovate fast enough to compete
To innovate successfully, you need the right processes, people and infrastructure, says Tony Warren, SVP, Strategic Innovation, FIS.
Modernize to the core
You must optimize the channel experience at every touchpoint with today’s customers, whether its mobile, online, in branches or at contact centers. Fundamentally, that means ensuring your core platforms provide consistent data across these channels.
It is all about meeting the needs of and delivering value to not only your customers, but also your employees. However, to do that, you must modernize, transform and simplify your technology from the ground up.
Keep your core systems focused on processing transactions and delivering the right data to the right place for the right purpose. Then, whatever the end-user needs, the channel can easily come and get.
Connect to engage
All too often, digital transformation projects focus on only the surface user experience: the interfaces that help move money fast, store it safely or put it to work. Now, it’s time to dig deeper and expand the definition of digital.
For truly differentiating, personalized user experiences, you must think about the connectivity of the digital systems that power your customers’ financial lives.
How, for example, does banking data move between a core account and a front-end interface? And how can you use that data to help customers understand their spending habits, better manage their finances or discover additional products and services that could meet their changing needs?
Improving connectivity doesn’t just help you access data faster: It also allows you to get a complete, 360-degree view of every customer and the different products and services you provide for them.
This improved visibility makes it easier to personalize the customer experience and improve engagement with tailored communication and product recommendations. It also harmonizes the employee experience, ensuring that front-, middle- and back-office staff are working with the same data and insight on the customer.
Reinforce and protect
So, what about the risks of deploying advanced digital technology?
In the digital world, IT financial services organizations are increasingly vulnerable to both cyberattacks and fraud, as bad actors take advantage of new tools and opportunities to exploit any weakness.
On the one hand, technology exposes you to risk. But on the other, it gives you the ammunition to fight back and establish controls that protect your organization while still giving customers a seamless experience.
In the 2024 FIS® Global Innovation Research1, 2,000 executives at financial firms and corporations shared their perspectives.
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% 31% of financial services firms around the world are concerned about cybersecurity threats from cloud-based attacks.1
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% But 63% of C-suite business leaders are currently using AI or machine learning for cybersecurity threat detection and another 37% for fraud detection and prevention.1
So, like the bad actors, the industry is harnessing the power of advancements in AI and data availability but as a force for good. More importantly, these tools help detect and prevent fraud and cyberattacks across digital channels in real time, at the point of entry and before they take effect, rather than react to them afterward.
Increasingly, there is zero tolerance of cyberrisks and more confidence that advanced technologies like AI can solve more problems than they cause.
Some tools, though, gain acceptance faster than others. For example, around 80% of leaders in financial services are confident that both robotics and cloud edge computing will deliver the most value to their business, with 77% feeling similarly optimistic about generative AI and industrializing machine learning.1
Conversely, financial services leaders are currently least optimistic about the business value of distributed ledgers or blockchains, digital currencies and tokenization.1 It is understandable as these decentralized technologies need a large community of users before they can deliver lasting benefits and banks have been slow to come on board.
However, with several banks now increasing their investment in blockchain solutions, it could only be a matter of time before decentralized technologies truly take off.
Transform or overspend
Innovation can’t happen without investment. But in uncertain economic times, financial services firms want to keep their costs as low as possible. So, how can your firm continue to digitally transform without breaking the bank?
The good news is that transformation itself can help cut your costs in the long term by enabling you to do more with less. The higher the levels of automation and the fewer manual touchpoints, the less talent you’ll need to waste on low-value, repetitive tasks.
Digital transformation, in other words, gives you the opportunity to rethink your operating model – including your people, processes and policies, as well as your tools and technology – as a whole.
Even better news: You don’t need to fund every innovation yourself.
If you join forces with a technology partner, you can take advantage of the scale and expertise of a vendor that may be investing in new ways that could help clients reduce costs, improve user experiences and increase revenue.
Elevate your expertise for growth
Engaging a technology partner to host, maintain and run your software in the cloud, or even take care of your business processes could help you simplify your operations and ease pressure on margins. But more than that, cloud services can provide the additional expertise you need to manage a modern IT infrastructure.
Working closely with public cloud providers, the right technology partner could provide you with the scale you need for transaction and data processing and the security it takes to keep data and operations safe from malicious activity.
After initial caution, the mood toward the cloud is shifting.
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% 37% of financial services firms are now optimistic about the value that cloud and edge computing can bring to their business.1
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% More than a quarter (26%) believe that embracing cloud computing will have a major impact on their business operations.1
Moving more of your operations to the cloud can also be a catalyst for organizational change: It can be a chance to reskill your own employees, reinvent your processes and establish a new mindset.
Ultimately, you must put your employees first to help them and your customers get the best from next-generation technology.
Thrive in an ecosystem
As more financial services organizations rebuild their operations in the cloud, they are taking the opportunity to consolidate and streamline their IT. Rather than implementing individual solutions, they opt to develop ecosystems of technology that use APIs to seamlessly integrate best-of-breed capabilities.
In the ecosystem, you can automate processes from end to end and create a single flow of data while constantly expanding your technology landscape to incorporate new solutions from different fintech partners, thereby ensuring that you continue to be well-positioned tomorrow to innovate, stand out and drive growth.
1FIS, Global Innovation Research 2024 surveyed 2,000 firms across financial services and other industries in the U.S., U.K., Singapore, Hong Kong and Australia.
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