Financial services organizations are built to operate in siloed environments, with functions designed to work autonomously and in isolation. Even though this design has been helpful at times, it’s become a detriment as the industry evolves. The increasing need for digital transformation, a host of new regulatory mandates, and increased competition have all made it imperative for these companies to integrate their business processes and data more effectively.
Now is the perfect time for financial services organizations to transform their business model from a siloed operation into a fully connected organization. This blog will discuss why now is the ideal time to change your financial services organization and outline some actions you can take to propel your transformation journey forward.
Financial Services Organizations Must Be Ready To Change Before It’s Too Late
The good news is that many financial services organizations realize the need to transform their business models. However, not everyone knows the increased pace of change and the corresponding digital transformation challenges. To be successful with digital transformation in financial services, the business must be ready to change; otherwise, it will be too late.
Change is inevitable, but people and organizations don’t like to change. They like to stay in their comfort zones and often resist change out of fear of the unknown. It will be too late if your organization is not ready to change. The rate of change has increased dramatically, and it will only get faster. The pace of change and the increased need to transform the financial services industry are forcing change on businesses and organizations.
What Is Financial Services Digital Transformation?
Financial services organizations understand that they must embrace digital transformation to remain competitive and relevant in the business landscape. However, it’s essential to define digital transformation because there are many definitions. The McKinsey Global Institute defines digital transformation as “the process of incorporating digital technologies and techniques into the organization’s business operations to create value.” One of the most basic definitions of digital transformation is “the process of transitioning an organization’s technology infrastructure to support new business models.” But, no matter which definition you prefer, digital transformation is more than simply incorporating digital tools and technologies into the organization. It’s about understanding that digital transformation involves the whole organization and involves an evolution in thinking from a traditional way of doing things to a more modern, data-driven way of thinking.
Why is Now the Perfect Time to Provide APIs?
There is a growing realization that existing models for financial services are outdated and need to be replaced. This results in businesses beginning to assess their APIs as a possible way to provide value to their customers and create revenue opportunities. New regulations, such as the U.S. Securities and Exchange Commission’s (SEC) expectations around data protection and the EU’s General Data Protection Regulation, force financial services organizations to embrace APIs.
API-based ecosystems are growing in popularity because they allow software development teams to create new applications, access data from legacy systems, create new business models, and generate revenue from their existing customers. With APIs, financial services organizations can create new, engaging content that their customers will want to consume. It can also help them better understand their customers and create new business models around specific use cases.
Should You Build Your Own APIs?
Depending on your organization’s needs and the stage of your digital transformation journey, you may want to consider building your APIs. Making your APIs can effectively give you complete control over the experience your customers receive when accessing your products or services via APIs. You can design your APIs to fit the needs of your business and the customers you serve. Building your own APIs can be a good approach if you are still in the early stages of your transformation journey and don’t clearly understand your requirements. You can also start small and build an ecosystem gradually while you figure out your needs, requirements, and capabilities.
As the financial services industry transforms, many organizations realize the need to change their business model. This transformation creates new revenue opportunities by providing new digital services via APIs. One of the best ways to get started with the transformation journey is to assess your APIs to see if they could provide more value to your customers.
You can also assess your organization’s readiness for change by looking at the following factors: Readiness – How ready are your organization and its stakeholders to embrace change? – How ready are your senior executives? – Are your financial services team members ready to embrace change? – How ready is your organization to invest in digital transformation? – How ready is your IT organization to embrace new technologies and APIs? – How ready is your organization to change its business model?