Disruption should be a driver for innovation in financial institutions, according to a panel of experts at the Association of Luxembourg Funds Industry (ALFI) Spring Conference.
Lyron Wahrmann, panel moderator and head of the Citi Markets Innovation Group at CitiGroup in Tel Aviv, opened by pointing out that the “pace of change and disruption has been dramatically increasing”.
One panellist, Olivier Renault of Societe Generale Securities Services in Luxembourg, said that while he doesn’t believe banks will disappear completely, their “current model is under attack”, with business models changing piece by piece.
However, another speaker, Furio Pietribiasi of Mediolanum Asset Management, argued: “We must be optimistic.”
He added that the industry is aware of the changes that have to be made, but suggested that instead, “the biggest issue we have in our industry is a culture change”, and that it is no longer a case of simply defining a strategy and sticking to it.
Wahrmann pointed out that expectations are changing, both from banks’ customers and their employees, and that they now expect mobile solutions. Citing driverless cars as an example, he suggested that with the ‘internet of things’, anything can be a computer.
Pietribiasi responded by saying that such dramatic innovation requires massive changes to infrastructure. A driverless car will not work if the roads are not yet mapped, he said.
Real mobility, he argued, is not necessarily achieved through accessing data through “funky” dashboards or apps, but through adapting that data to create more meaningful information, which is much more challenging.
Renault added to this, suggesting that a lot of the data currently available is not ‘clean’, and that too many intermediaries can render any data effectively unusable. He said: “That is why new entrants have a great advantage.”
With regards to big data, however, Pietribiasi reiterated his optimism, suggesting that the industry is in good stead.
Partly, this is because banks tend to have good margins, meaning they have the finances available to restructure their systems, but it is also related to the fact that there is a better awareness of big data now, with banks no longer “hiding behind regulation” or making excuses not to invest in it.
He added that market disruption, both in the areas of big data and blockchain, would be positive, and could be the push that institutions need to get their own projects off the ground.
“We’ve been talking a lot about this but we need to see more successes,” Pietribiasi said.
Renault added that innovation is “a journey” and “something we need to embrace”, adding that institutions could learn from startups.
He suggested that by working with startups either through investment, through purchasing and integrating new technology or through participating in initiatives, institutions could avoid being left behind in the future.
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