Banking 3.0 – Powered by Fintech

A white paper on the generational impact of Fintech in banking and the workforce retraining approach required

June 2018

Author: Ajay Shukla

  1. Executive Summary
  2. Rationale
  3. Partnerships
  4. Innovation
  5. Learning Design Approach
  6. Conclusions and recommendations

A new innovation in financial services is emerging in the area of financial technology (“Fintech”).

These innovations have challenged conventional banking and take advantage of advances in digital technology, developing banking products that are user-friendly, cost less to deliver and optimized for digital channels.

Fintech applications are bypassing the need for regulatory compliance and leapfrog legacy systems leveraging two unique selling points: better use of data and frictionless customer experience.

We believe that by extending the use of data and frictionless processes Fintech will

  1. a) Expand applications – well beyond the confines of payments and consumer credit. It will move deeper into middle and back office processes providing new, richer propositions for end customers. It will deliver fundamental changes to the infrastructure and processes at the core of the financial services industry.
  2. b) Cause disruption in the banking sector through Application Programming Interfaces (APIs), as digital technology has in other markets, such as airlines and hospitality.

-Pre-digital business models and processes will be rendered obsolete

-Banks need aware of these changes and the opportunities they present and participate in this disruptive trend by actively supporting Fintech

  1. c) Cause banking industry to embrace Fintech. Banks are presented with opportunities and challenges viz.

– They are trusted brands and possess rich data, licence and in-built compliance systems

– They understand banking (relative to tech companies)

– Their workforce needs a massive re-learning and adaptation to Fintech models

– Cultural change to ‘fail fast’ mentality of Fintech vs. conservative ‘never fail’ mind set

  1. d) Foster an ecosystem of partnerships – Banks, now more than ever, need to work with Fintech disruptors, be prepared to overhaul their processes and technology and transform the workforce with the right training to embrace Banking 3.0. They need to see themselves as ‘technology companies that happen to move money’.

This paper intends to review the learning needs of the banking industry to enable this transition.

Why banks cannot ignore Fintech

First, Fintech will cut costs and improve the quality of financial services. Through clever use of transaction data, artificial intelligence and big data analysis automation the administrative cost of lending, trade and investment transactions can be reduced.

Second, assessing risk will be cheaper, faster and better –through big data and analytics about customer transactions, financial behavior Fintech will enable superior risk decision-making.

Third, the Fintech will enable more inclusive banking with geography no longer a limitation for banking and financial institutions to manage customers.

Why Fintech education and training?

Finance and banking professionals need awareness training and a mind set change to embrace and see Fintech as the Banking 3.0 and not as a threat.

Functional specialists, segment leaders and managers at all levels require specialized training on the components of Fintech that have application in the current and future processes of banking and finance sectors.

As these technologies are adopted a skilled and ready workforce can be an efficiency multiplier for financial institutions to remain competitive and relevant to its customers.

Fintech adoption is only the start of the change. Product, process and performance innovations using Fintech could and should be driven by the banking/finance professionals who have achieved proficiency and higher order skills through a careful and professionally designed learning and development programs by the best in the business.

Digital disruptive technologies don’t stand still – they change and improve constantly.  This requires:

  1. Agility in the learning platforms that can allow for constant redefinition of learning outcomes and content
  2. Using learner behaviour, data and analysis to enhance the efficacy of the learning content
  3. Accessing subject experts drawn from the world’s leading universities and Fintech innovators and thinkers. In-house development is no longer an option.

Why Distributed Ledger (Blockchain) and Data Analytics are ‘must learn’ for all finance and banking professionals

Blockchain is one of the most disruptive technologies today, and it is affecting many industries including financial services, trade, healthcare and supply chain. Understanding of the fundamentals of the Blockchain technology, and its diverse use cases, from banking, to trading markets, to client and asset management, to auditing and compliance is a need across the workforce.

Data analytics (DA) is the process of examining data sets in order to draw conclusions about the information they contain. The Banking industry generates a huge volume of data on a day-to-day basis. To differentiate itself from the competition, banks are increasingly adopting big data analytics as part of their core strategy, to make more-informed business decisions such as Customer Segmentation and Credit Risk Management. Knowledge and application of DA concepts and principles that lay the foundation to understand and learn the specialised DA skills especially in the areas of retail banking.

Banking 3.0 powered by Fintech is not a standalone change. Multiple stakeholders must collaborate for an effective transition.

Universities must embed Fintech courses in the IT and business education curriculum.
Prioritization of Fintech in their continuous learning and professional education and training programs for various target audiences is also an imperative.
They also need to lend academic expertise, curriculum design, content authoring and program accreditation and help e-learning companies like AptaraCorp expand the reach and impact of the training through digital platforms to the industry.

Industry should provide subject matter expertise to source use cases, adaptation of training for application at the work place and adoption of training programs for the relevant work force.

Training companies must develop learning outcome oriented courseware, sophisticated learning design, digitization of the learning objects, leverage latest technology platforms and a data driven, adaptive, mobile, 24×7 e-learning environment.

21st century learners, especially busy ‘millenial’ professionals, expect the learning to be digitally driven, on-demand, socially networked and self-paced.

Further, learning programs require availability on all mobile devices with content adapted to the screen size, attention span (micro-learning objects) and ‘fun while you learn’ approach through gaming/VR.

This requires creativity and expertise in the learning design that may not be within the competencies of traditional learning and development divisions of banking and financial services institutions.

Fintech, in its broadest sense, is expected to cause a disruption in the banking sectors of a scale and scope that can be compared only to the impact of Internet.

Banking and financial institutions need to develop a mind set and a workforce retraining agenda to embrace Fintech and see themselves at technology companies that happen to be in the business of moving money.

The scale of change is so large that the retraining programs of Banking and Financial Institutions need to work in close cooperation with Learning and Development companies, universities and innovative subject matter experts.

A ‘mobile first’, on demand, adaptive, outcome oriented, data driven learning platform is the only way to successfully transition to Banking 3.0

The term “Fintech” has been defined in many ways. This paper uses the term broadly to encompass a wide spectrum of technological innovations which impact a broad range of financial activities, including payments, investment management, capital raising, deposits and lending, insurance, regulatory compliance, and other activities in the financial services space. These innovations include, for example, mobile payment solutions for consumers and merchants, online marketplace lending, algorithmic savings and investment tools, virtual currency, biometric digital customer identification and authentication, and automated mid- and back-office enterprise functions, such as the use of algorithms, big data, artificial intelligence, and link analytics.

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