So, you want your flat white and to drink it too? or innovation is great, but change is hard.
Published on 8th August 2023
Article by Elaine Mullan,
Head of Marketing & Business Development at Corlytics
It’s happening! The disruption is real and it’s here to stay. We’re living through a time when people and firms are using technology in new and innovative ways, but what does this mean for business leaders? Let’s talk about how technology is changing everything in our lives as well as what that means for regulation and those that regulate.
DISRUPTIVE TECHNOLOGY
Disruptive Technology makes life different, for everyone, but in time these technologies don’t feel disruptive anymore. At one time (actually the last century) ATM’s (automated teller machines) were disruptive, with bank customers able to access cash from these automated machines 24/7 and a reduced need for bank tellers. Now ATM’s face disruption from smartphone apps such as Apple pay, Google pay etc with changing customer behaviour including a requirement for an ATM. Indeed, not just ATM’s but their access tool, the little plastic debit card also being replaced by digital access via smart phones. Today, most digital transactions are still connected to the banking system and are moving currency around be it pounds, dollars or euros – in other words tap your phone on the payment pad to pay for your flat white. But emerging technologies now offer another way of paying for that flat white, that is cryptocurrencies – and once again we can see how the financial services sector is shifting. With this shift comes another, a shift in regulation and the balance to be struck between supporting innovation within the sector while protecting consumers and avoiding systemic risk.
CHANGE ADVERSE
We love the idea of progress and innovation, but we’re not always keen on change. Change is hard. The process of change is hard. Business leaders can enjoy the ease of email over typed and posted letters, of clicking and setting up meetings on digital apps rather than trading voicemails, and at the same time feel swamped in overfull inboxes, meeting alerts and hours of face-to-face group meetings with familiar phrases disturbing the flow – you’ve got your mic on mute – sound familiar? We want to have our cake and eat it, but this isn’t proving a simple task.
Emerging technologies such as (AI) artificial intelligence and machine learning are revolutionising the way firms operate. These technologies can help firms to make better decisions which will lead them towards success. Indeed, new business models develop due to technological innovation and are very much part of the digital transformation agenda. Just take a peek at the digital asset ecosystem with its decentralisation and, earlier mentioned, crypto/digital currencies and general potential for disruption and it becomes obvious that firms need to build resilient business models amid the volatility in this rapidly evolving space as digital asset firms seek to close the trust gap with banks and change the competitive landscape – an environment where even several of the central banks have their own plans for a digital currency or CBSC (Central Bank Stable Coin).
SOLVING THE ENTIRE REGULATORY MANAGEMENT VALUE CHAIN
A positive effect of this digitalisation of financial services is that it has provided for transformation and innovation throughout the value chain for firms that are embracing this change. With the emergence of new technologies comes many opportunities for firms including new tools to help build out sustainable business models. Alongside this technology growth is the rise of regulatory and compliance challenges as regulators continue to both encourage innovation within financial services and seek to protect the industry and individuals from bad practice. A recent white paper published by the UK government’s Department for Science, Innovation and Technology, “A pro-innovation approach to AI regulation” is a good example of the balance that regulators are seeking to strike with a regulatory framework that makes innovation easier. These new legal and regulatory requirements are constantly evolving as technology innovates and changes and impacts the bottom line as well as other areas of a firm’s business, such as cybersecurity and data privacy. As the laws change, so do the regulatory compliance standards and obligations from regulators. Regulatory compliance can seem like a moving target that never stops changing, particularly when it comes to newer technologies like blockchain and cryptocurrency, which have been evolving rapidly and regulators are now trying to establish what best regulatory practice looks like in this area. We are yet to see a coordinated global approach, however, the EU has taken an important step towards the creation of a comprehensive digital asset regulatory framework as set out in the Markets in Crypto Assets (MiCA) Regulation.
REGULATORY TRANSFORMATION
If you are a business leader within financial services you’re thinking about the future. Corlytics is helping clients who are forward thinking and investing in digital transformation around regulatory change management, compliance and of course regulatory risk management. These firms are partnering with Corlytics as they can see the value in having a specialist regulatory technology (RegTech) firm to help them execute on their agendas including innovation and obligations management.
Strategic leaders are the ones who create the future. They are those who have a vision and know how to get there – or the ones who feel they can actually have their flat white and drink it too. They understand that the world is constantly changing and that they must adapt, or risk being left behind by their competitors who are able to keep up with these changes (or even ahead of them). They know what it takes for their firm to succeed over time, which means having an accurate understanding of where they currently stand in relation to their goals as well as how others perceive them within their industry or field of expertise.
We are riding the wave of an industrial revolution, the digital revolution that is influencing what is happening around us and is reflected in what is happening within financial services. Financial services models, processes, the nature of work and the services offered are being transformed – all while costs must be managed and risk reduced. It’s going to be an interesting journey, let’s hope there’s enough coffee to keep us all going.
This article by Elaine Mullan was written for Insight Success Magazine.