And while innovation is important to remain relevant, I don’t believe companies should invest in innovation for the sake of being “forward thinking.” Getting the most out of innovation requires rigorous analysis of how the fully realized value of innovation will help position the company for success. Without a clear view of how innovation supports the business strategy, even successful innovation efforts will not have maximum impact.
At VFS, we really look at innovation in a few different dimensions.
I get asked a lot about what’s coming and what am I watching out for that could be a game changer. I want to mention two things here: Personalization and the combination of existing technologies.
With the increasing availability of data and gains in data processing speeds, personalization in financial services is definitely an opportunity going forward. One clear example can be seen in insurance. Insurance used to be offered using historical data based on the characteristics of a segment of customers. Increasingly, innovation in B2B insurance is allowing for the creation of more customer-specific insurance products that reflect the real-time risk and behaviors of individual customers. I expect this trend to continue as financial services firms further increase their customer insight through compliant data capture and enhanced data analytics.
Another area I am following is the immense potential found in converging technologies. Specifically, I’m watching how this relates to the development of the next generation of the Internet (Generation 3) that seeks to combine blockchain, AI, augmented reality, digital currencies, edge computing and other existing technologies. This is creating a new internet infrastructure that could create many new possibilities for how financial services are selected and managed by customers. If this vision of the next generation of internet is realized, financial services companies could see as dramatic an impact on growth, efficiency, security and risk management of financial transactions as the sector realized from the first two generations of the internet.
It’s all really exciting to be part of. But I am also aware of the potential downsides. AI deployment at scale still carries unknowns. The risks could take time to appear, and unintended negative consequences may follow that could be difficult to reverse.
Ultimately, innovation in fintech is transforming the financial services industry. At VFS, we aim to accelerate reaching the aspirations contained in our business strategy through investments in innovation. Reaching these aspirations will strengthen our market position and have a positive impact on our customers’ businesses as well.
What are your thoughts? I’d be happy to answer questions or hear your perspective on this as well.