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Mobile Hot, Cloud Not in Financial Services

A survey conducted by the Harvard Business Review in conjunction with Verizon looked at technology trends in various industries.

Though most financial services firms consider themselves "fast followers" as opposed to trailblazers when it comes to adopting new technology, they tend to embrace the technology they do adopt and make it central to the business, according to the results of a survey conducted by the Harvard Business Review Analytic Services and Verizon.

The survey polled 672 executives in all industries, including 82 in financial services, on their views on technology. The responses from the financial services professionals indicate an eagerness to adopt new technology, despite the industry's reputation for conservatism.

Some 36% said they were "ahead of their competitors" in use of new technologies, and 68% say they’d "moderately, significantly, or completely changed" their core business strategy in the past three years. Additionally, financial services firms are building new technologies directly into their products and services more than almost any other sector, the survey found. Nearly 75% of financial services respondents said their offerings had at least moderately changed as a result of new technology within the past three years, compared with an average of 68% of the overall survey.

 

Chart courtesy Verizon



Changing customer expectations are the primary driver behind these transformations, cited by two thirds of respondents. Further, those polled said technology will primarily change customer service functions more so than any other business function.

When it comes to what kind of technology they are using, most of the financial services respondents cited mobile as a primary area of adoption. In terms of individual business functions, 60% of financial services respondents said that marketing, sales, and customer engagement had been significantly affected by mobile, above the average of 50% in the overall survey.

On the opposite end, cloud adoption remained low in financial services, with only 20% of those polled saying their firm made "extensive" use of cloud service. This is primarily due to regulatory scrutiny in the industry -- particularly around privacy and security -- with 50% responding that using cloud was "too risky." Another factor cited for the lack of cloud adoption was being inhibited by legacy systems.

Regarding data analytics, 34% of those polled in financial services said they use analytics "extensively" compared with 32% of the overall survey. Financial services respondents also reported that analytics have affected marketing and customer engagement (51%) and product offerings (39%), both ahead of the overall survey average. Where financial services firms don’t use analytics, 44% cite cost and 44% cite cultural resistance to change.

[Learn more about the Internet of Things at Interop's Internet of Things Summit on Monday, September 29.]

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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Byurcan
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Byurcan,
User Rank: Author
9/23/2014 | 10:18:25 AM
Re: Do you agree?
Yeah, mobile is less tricky to adopt, most vendors have mobile solutions to offer, it's not as hard a decision to decide how much and what to store in the cloud.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
9/22/2014 | 4:46:40 PM
Re: Do you agree?
Yes from everything that I've been hearing banks are largely testing the waters right now, putting less critical systems and applications in the cloud. As the author of the feature that Kathy mentioned, I should probably add that most of the examples in the feature came from outside of financial services, with the exception of an insurer. But all fo the examples were also easily translatable to financial services. Many of them were linked to BYOD and mobile workforce initatives, another IT issue that some banks might feel hesitant about because of risk.
Byurcan
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Byurcan,
User Rank: Author
9/22/2014 | 2:02:35 PM
Re: Do you agree?
Yes, but I think we're still in the begninning stages, banks are starting to adopt some cloud services after initial reticence, but the industry as a whole hasn't jumped in feet first.
Kelly22
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Kelly22,
User Rank: Author
9/22/2014 | 1:18:42 PM
Re: Do you agree?
That would make sense. Given that half of respondents perceive the cloud as "too risky," it could be that they're slowly adopting cloud technology in order to protect their sensitive data. I'm not surprised to see that mobile is seeing such rapid growth. By now, most businesses have learned that mobile is critical to an optimal customer experience and are adjusting their strategies accordingly. 
KBurger
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KBurger,
User Rank: Author
9/22/2014 | 12:49:59 PM
Re: Do you agree?
I guess "slow" is a relative term. What do you think Bryan? Didn't we just have a whole feature in the most recent digital issue discussing how cloud is now viewed as key to improving customer experience, etc.?
Byurcan
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Byurcan,
User Rank: Author
9/22/2014 | 12:42:50 PM
Re: Do you agree?
I think it shows that FS is treading a bit slowly into cloud. According to this survey, a low perctange of those polled repoirted making "extensive" use of cloud, but they could be using cloud in a  limited capacity. Also, the findings were for financial services-wide, and not broken down into subsets. So while retail banking, for example, may be using coud more, perhaps capital markets isn't?
KBurger
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KBurger,
User Rank: Author
9/22/2014 | 12:18:58 PM
Re: Do you agree?
Right, despite their traditional conservatism financial institutions are finding a variety of ways to bring mobile into the mix -- mobile banking is the fastest-growing channel by all accounts, and insurers also are making some interesting uses of mobile as a tool for agents and claims adjusters. Not to mention the use of mobile devices by their own workforces. My question is about the conclusion that cloud is not being embraced. I just don't see that. Maybe not as visibly or in as many flavors as mobile. But everything we're hearing tells me that cloud adoption is really accellerating.
Becca L
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Becca L,
User Rank: Author
9/22/2014 | 12:13:58 PM
Re: Do you agree?
Interesting point, Kathy. Financial institutions, especially banks, are conservative about new technologies, and putting information outside their firewall is especially nerve-wracking. Mobile, on the other hand, is a necessity, an inevitability. Mobile is important if they want to maintain a competitive advantage, both internally with flexible BYOB policies, and with clients for mobile banking capabilities, it's no surprise to me that mobile is seeing such a rally.

Interesting survey, Bryan, thanks for highlighting it.
KBurger
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KBurger,
User Rank: Author
9/22/2014 | 11:32:11 AM
Do you agree?
Bryan, I agree that the findings around mobile are very interesting. However, I would challenge the findings (or at least the interpretation) around cloud. I suspect there's a bit of an "apples/oranges" comparison here, looking at how financial services companies are looking at cloud compared to how smaller, less-regulated businesses might be viewing it. As you know, Bank Systems & Technology is reporting on an ongoing basis about the changing perspective on cloud-based solutions, and I would argue that the changes being wrought by mobile that are cited here probably can't be fully realized without some adoption of cloud-based solutions. Experts are telling us it is almost impossible to achieve necessary speed to market, agility, and responsiveness to market trends without it. What do you think?
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