Since moving from telecoms into the financial services industry, I have observed that there are a number of lessons that we can take from the disruptive approach we adopted at Skype and change the way our sector operates. In particular, the way we used technology and prioritised core services in my previous line of work can be applied to data management and change standardise large parts of the sector.
How telecommunications has evolved
Telecommunications has changed significantly in the last ten years. The regulation, technology and approach have all been reviewed and the industry has seen obvious moves. For example, voice to data as well as communications switching to apps.
I have witnessed complex regulation in the financial services sector and, like in the telecommunications sector, this is constantly changing and creating new challenges.
However, our approach and business practices have not changed.
From the outside it is easy to think that the reason the telecommunications industry changed is solely because of the rise of 3G and eventually 4G technology. But it is important to appreciate that consumer behaviour has played a key role in this and I like to believe Skype played a part in how people consume technology today.
Skype’s approach to voice services radically changed the market as we focused on lower cost and high quality international calls. To guarantee this standard, in traditional telecoms networks, operators needs to connect to hundreds of networks globally.
Quantitative measures are used to monitor performance. At Skype we defined quality of service as a core value. We created a live feedback feature which is used after every call and we built an algorithm which allowed business allocation based on customer feedback. We drove this innovation.
Currently, the financial services sector is still reliant on manual operations and systems are not streamlined to free up professionals to work on their area of specialism rather than on back office functions.
Just as voice has become a secondary asset to data in telecommunications, so to traditional investment - especially assets under active management - is facing an optimisation drive.
We need to find solutions that automate compliance processes, giving better focus to core activities. Understandably, asset managers currently tend to build a lot of solutions internally.
However, the industry as a whole would benefit from taking a step back to determine which tasks are core, such as product manufacture and investment management, and which tasks can be considered as non-core.
If done correctly, there is every chance that this could lead to greater business efficiencies and in time, lead to a more standardized industry, as we all witnessed in the communications industry.
Where the industry is headed
The industry is ready for disruption and a move towards robo-advisory services. There are important benefits to developing these capacities especially for back office functions.
Well designed, secure robo services will have the dual benefits of streamlining procedures and cutting costs. Initially replacing services with technology will have regulatory and cost impacts but in the long term it will restructure the industry and could bring even greater standardisation across financial services.
Ultimately this will give our clients and investors a better service. In that way, we still must catch-up with telecommunications where standardisation has already taken place.
Overall, I think the biggest lesson we can learn from the communications industry is the need to put customers in control. There is a notable trend of younger investors demanding more knowledge of and access to their investment choices.
The industry therefore should look at systems that allow the end user to understand and put them in control, whether they are an asset manager or an individual. If we can simplify processes, then their needs will define the future of the industry. Customers will decide and putting them in control needs to be our mission regardless of the industry.
By Lauri Paal – KNEIP
KNEIP is an industry leader in data management and reporting solutions for the investment and insurance industry. Its new digital platform will allow you to fulfil all your regulatory and market demands in one place, significantly reducing time, resources and costs.