Highlights of 2014 and some Predictions for 2015 in Financial Technology

Posted on : 22-12-2014 | By : richard.gale | In : Innovation

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A number of emerging technology trends have impacted financial services in 2014. Some of these will continue to grow and enjoy wider adoption through 2015 whilst additional new concepts and products will also appear.

Financial Services embrace the Start-up community

What has been apparent, in London at least, is the increasing connection between tech and FS. We have been pursuing this for a number of years by introducing great start-up products and people to our clients and the growing influence of TechMeetups, Level39 etc within the financial sector follows this trend. We have also seen some interesting innovation with seemingly legacy technology  – Our old friend Lubo from L3C offers mainframe ‘on demand’ and cut-price, secure Oracle databases an IBM S3 in the cloud! Innovation and digital departments are the norm in most firms now staffed with clever, creative people encouraging often slow moving, cumbersome organisations to think and (sometimes) act differently to embrace different ways of thinking. Will FS fall out of love with Tech in 2015 – we don’t think so. There will be a few bumps along the way but the potential, upside and energy of start-ups will start to move deeper into large organisations.

Cloud Adoption

FS firms are finally facing up to the cloud. Over the last five years we have bored too many people within financial services talking about the advantages of the cloud. Our question ‘why have you just built a £200m datacentre when you are a bank not an IT company?’ was met with many answers but two themes were ‘Security’ and ‘We are an IT company’…. Finally, driven by user empowerment (see our previous article on ‘user frustration vs. empowerment) banks and over financial organisations are ’embracing’ the cloud mainly with SaaS products and IaaS using private and public clouds. The march to the cloud will accelerate over the coming years. Looking back from 2020 we see massively different IT organisations within banks. The vast majority of infrastructure will be elsewhere, development will take place by the business users and the ‘IT department’ will be a combination of rocket scientist data gurus and procurement experts managing and tuning contracts with vendors and partners.

Mobile Payments

Mobile payments have been one of the discussed subjects of the past year. Not only do mobile payments enable customers to pay without getting their wallets out but using a phone or wearable will be the norm in the future. With new entrants coming online every day, offering mobile payment solutions that are faster and cheaper than competitors is on every bank’s agenda. Labelled ‘disruptors’ due to the disruptive impact they are having on businesses within the financial service industry (in particular banks), many of these new entrants are either large non-financial brands with a big customer-base or start-up companies with fresh new solutions to existing issues.

One of the biggest non-financial companies to enter the payments sector in 2014 was Apple. Some experts believe that Apple Pay has the power to disrupt the entire sector. Although Apple Pay has 500 banks signed up and there is competition from card issuers to get their card as the default card option under Apple devices, some banks are still worried that Apple Pay and other similar service will make their branches less important. If Apple chose to go into retail banking seriously by offering current accounts then the banks would have plenty more to worry them.

Collaboration

The fusion of development, operations and business teams to provide agile, focussed solutions has been one of the growth areas in 2014. The ‘DevOps’ approach has transformed many otherwise slow, ponderous IT departments into talking to their business & operational consumers of their systems and providing better, faster and closer-fit applications and processes. This trend is only going to grow and 2015 maybe the year it really takes off. The repercussions for 2016 are that too many projects will become ‘DevOpped’ and start failing through focussing on short term solutions rather than long term strategy.

Security

Obviously the Sony Pictures hack is on everyone’s mind at the moment but protection against cyber attack from countries with virtually unlimited will, if not resources, is a threat that most firms cannot protect against. Most organisations have had a breach of some type this year (and the others probably don’t know it’s happened). Security has risen up to the boardroom and threat mitigation is now published on most firms annual reports. We see three themes emerging to combat this.

– More of the same, more budget and resource is focussed on organisational protection (both technology and people/process)
– Companies start to mitigate with the purchase of Cyber Insurance
– Governments start to move from defence/inform to attacking the main criminal or political motivated culprits

We hope you’ve enjoyed our posts over the last few years and we’re looking forward to more in 2015.

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