30 Voices on 2030: The New Reality for Financial Services

The context

The consumer of 2030 is not only more socially and environmentally conscious than ever, but with consumer data right (CDR) widespread, they will also be more data-aware and discerning in what data they share, with whom, how and for what purpose. Trust that a firm will do the right thing by them emerged as the key differentiator.

In return for trusting firms with their data, customers expect products and services that seamlessly integrate into and enable their evolving lifestyle needs.

To deliver that, the financial services industry has embraced platformification, which will absorb activities like payments, insurance policy procurement and mortgage origination into broader and more immersive customer episodes, orchestrated by financial services providers. No longer tied to a single provider, multi-bank relationships are commonplace.

The context

To achieve platformification, traditional FS providers, fintechs, supermarkets, utilities and manufacturers now cooperate within partnership models to provide personalised and rewarding experiences. The FS CEO of 2030 is now required to be an orchestrator of partnerships.

Amongst the winning providers, three sustainable business models exist in 2030: 1. Scale players, the core of the industry, derive competitive advantage from their large balance sheets and capacity to conduct business globally. 2. Specialised verticals seek to own highly profitable specialised segments 3. Historical brands with strong historical consumer brand affinity survive by proactively engaging with partners to deliver the services their loyal base demands.

As the customer and their expectations have changed, so have the economics underpinning the financial services industry. Certain services are expected as a given and available for free. Customers only pay for services from which they believe they are deriving real value. Instead new business models, revenue sharing arrangements, subscription-based services and fee structures now generate 50% of the revenue of a bank or insurer.

The context

Stakeholder capitalism has become a deeply entrenched mode of operation for the industry with firms being judged by the action they are taking to address climate change, how they treat vulnerable customers, and how they address inequality in society. Recognising this, the financial services industry has deployed its vast resources to accelerate the transition to a zero-emission economy, driving outcomes that far exceed government targets.

Being dependent on customer data to derive value and generate revenue, the industry has also made significant investments to design trustworthy artificial intelligence (AI) to counter privacy violations, unintended biases and discrimination, and inappropriate customer outcomes.

Meanwhile, regulators are partnering with regtechs to monitor the activities and conduct of firms in near-real-time thanks to the wave of digital transformation that accelerated through the 2020s.

The context

The arms race to secure the best talent continues to be fierce as technology and innovation continue to disrupt the industry.

Driven by AI and data, traditional business and financial acumen is now augmented with digital skillsets and the ability to be data dextrous. While recruits are not required to understand specific coding languages, they are required to understand the logic and algorithms that underpin and impact customer outcomes — and to challenge whether they have been ethically constructed.

Firms employ fewer people overall, slimming down and adopting the skills and practices traditionally aligned with technology companies that have enabled them to become more nimble and entrepreneurial.

With people and firms refusing to go back to the old way of working, the hybrid working revolution sparked by the COVID-19 pandemic has endured, broadening the potential talent pool as employees continue to work from any location in any time zone – a truly global workforce has now arisen.

The context

Data is the currency of growth: successful firms continue to be those that maximise their access to data to more accurately and competitively price risk and credit and provide personalised services to their customers.

To protect that data, financial services products and services are accessed using biometrics and behavioural technologies, augmented by AI security profiling to provide constant, real-time user identity validation. Physically inputting PINs and passwords is a thing of the past and two-factor authentication has largely disappeared.

Quantum computing has had a profound impact on both data protection and opportunities. It accelerated the pace at which AI learns and advanced quantum algorithms and analytics can price more effectively and optimise portfolios for return and risk.

The context

Despite it already being the direction of travel, COVID-19 sounded the death knell of cash and cheques — and the adoption of digital payments by many of the last pockets of resistance proved that. In its place we saw the rise of the central bank digital currency (CBDC) and corporate coins.

Corporations also developed purpose-built asset collateralised stable coins to handle specific tasks, which gave rise to new products, services and sources of revenue.

More broadly, the distributed ledger technology (DLT) upon which digital units of exchange are built, also provided the infrastructure upon which customer, transaction and trade information is now shared between institutions and across borders. Traditional risk assessments were relegated to the past. DLT is now playing a fundamental role in upholding the core objectives of the financial system: driving efficiencies, ensuring stability and maintaining a competitive environment through innovation.