04 Sep Surviving the Disruption in Financial Services
We’ve been hearing the buzz word ‘disruption’ a lot, lately haven’t we? Especially when it comes to surviving Financial Services. The fact is, if you’re pretending it’s not happening, you could fall behind the curve ball. If anything, this disruption is an opportunity to take a serious look at your business to future proof it. Researching, experimenting and paying attention are going to be the key for surviving the disruption in financial services.
Last year the Committee for Economic Development, Australia (CEDA) warned over 40% of the nation’s jobs were at risk from automation over the next 10 – 15 years. While that focus was on the risks to workers, it’s equally threatening for small business notably when it comes to financial services. Many companies and sole traders are facing the same disruptions from technological change.
This very morning, on the news I watched as it was reported that the NBN slowed down its roll out as the technology moved ahead faster than what they anticipated, and needed to make upgrades in order to make it even viable. Embarrassing as Australia is already so far behind when it comes to connection speed and ability in this space.
This isn’t a new phenomenon, in the Twentieth century the motor car displaced thousands of small businesses that catered to the horse drawn economy and family run corner stores were displaced by the arrival of supermarkets in the 1950’s.
Bookkeepers – ahead of the game
At the end of the last century, the personal computer’s arrival revolutionised small businesses as suddenly tools that were previously only in the reach of big organisations were suddenly accessible to the most modest venture.
“Assuming it won’t happen to your industry is probably one of the riskiest things of all. “
One of the early beneficiaries of that shift to desktop computers in 1990’s was the bookkeeping industry which took off as a legion of home-based contractors catering for local small businesses.
As the internet and smartphones came along, the bookkeeping market changed as features like bank feeds and receipt apps automated many previously manual tasks.
Despite those challenges the bookkeeping industry has survived and continues to grow with IBIS World estimating the overall accounting industry, which includes bookkeepers, grew 2.6% per year over the past five years.
How to pivot successfully
The success of bookkeepers and accountants in navigating change is probably thanks two main things.
- Being close to their clients, always learning what their clients wants and needs, and how they prefer to receive their marketing and communication.
- They’re also early adopters of new technology, always looking for a way to do things smarter.
Uber’s success in upturning the taxi industry illustrates just how important understanding emerging technologies is for smaller businesses.
One industry currently facing massive disruption, and the industry closest to my heart, is the financial sector. In fact, Deloitte put out a report on The future of financial services, and the impact for Australia, which I found very telling. They identified, at a high level, that there will be 6 main market activities that will be highly affected by 11 clusters of innovation.
I inserted this info graphic from the report to make it easier to grasp.
11 CLUSTERS OF INFORMATION
How fast can you adapt?
Fastbrick integrates with design software shows how the dynamics of construction are changing. In 2014 Chinese company Winsun demonstrated they can build ten houses in a day with large scale 3D printers.
While we may not see that particular technology in Australia, aspects of it will be used and it’s going to mean change for all the trades and professions related to the building industry.
Architects are one building industry group that have long dealt with technological change. Like bookkeepers, the arrival of personal computers completely changed their profession and those who adapted thrived.
Now, with cloud computing services plugging into builder’s supply chains like Winsun and machines like Fastbrick’s, architects are closer than ever to the worksite and their customers. The ones who are adapting are the earlier adopters who are getting into these technologies further.
Pressure points from Australian regulators
In order to support the innovation in financial services, alongside competitive neutrality and investor protection, Australian regulatory frameworks need to be reshaped. We have already been seeing it the mortgage industry, financial planning and superannuation industries.
New regulations will focus on activities rather than the type of institution or entity. Innovation that enable consumers to have access to more tailored products, improve customer service and manage risk, will assist regulators to carry out their role of ensuring consumer trust and confidence.
New platforms and decentralised technologies that create more streamlined infrastructure may fall outside the existing regulatory remit challenging regulators’ ability to carry out their mandates.
Mandates on ensuring consumer trust and confidence may require more attention if removing professional intermediaries (subject to prudential and licensing requirements) leads to poor consumer choices.
The strategic role of data will mean increasing regulatory action around breaches of data security and misuse of personal information.
Customer empowerment will heighten consumer risk, requiring regulators to adjust regulatory frameworks to ensure such risks are identified and mitigated.
Financial and technological literacy among consumers, as well as within regulators themselves, will increase in importance.
AI is coming – is your profession ready?
Accountants and architects aren’t the only professions being affected, lawyers are facing a new wave of services using artificial intelligence to do many legal tasks ranging from a chatbot that appeals traffic fines to a program that predicts Supreme Court decisions.
Like other sectors, it’s the early adopters in the legal sector who are adapting to a very different industry with much of the manual, lower level work being automated out.
The wave of technology we’re now seeing appear – including robots, autonomous vehicles, machine learning and artificial intelligence – are going to change our industries and workplaces dramatically in the next few years.
What the accounting industry and the architecture profession teach us is the businesses closest to their customers and those adopting technology early will be the ones who thrive in a very different industry to what they currently know. Researching, experimenting and paying attention will be the keys in business survival and when it comes to surviving the disruption in financial services.
Assuming it won’t happen to your industry is probably one of the riskiest things of all.
Ten years ago, the idea of smartphones revolutionising the taxi business or that robots could replace bricklayers was unthinkable. Now it’s almost expected.
The forces that are changing the workplace are also changing industries and markets, so small businesses will also be affected. It’s going to pay to be smart and curious to survive especially when it comes to surviving the financial services, which is currently facing massive disruption.
Tell me what you think in the comments.
Sue Mills is a marketing, sales and digital specialist to the financial and professional service sector, and the owner of Sassy Marketing & Communications. With over 20 years of experience working for and with financial planners, accountants, brokers and advisors she shows her clients how to step up and out to be sustainable and thrive in their practices through adopting smart and valuable marketing strategies. Call Sue on 0477 468 888 for a confidential discussion or visit www.sassy.marketing.