Financial services in 2020 was defined by a sudden acceleration in digitization and digital engagement—pushed by the impacts of the COVID-19 pandemic. Exchanges shut down their trading floors and moved to remote trading, mobile banking transactions spiked, personal trading apps saw record transaction volumes, and call center personnel kept customer support going by working from their living rooms.
While the financial services industry was able to weather the digital tsunami and continue its operations, it has become clear that the winds of change are not transient. Financial institutions are now thinking strategically about their technical setup and questioning whether the tools that they have previously relied on are the right ones to use going forward. Here are a few major themes we’ve identified as being likely to dominate financial industry conversations and technology roadmaps in 2021:
1. Modernizing dated core systems will be imperative
2020 was a year that put the financial infrastructure to the test and challenged existing architecture planning assumptions. Many of the core systems had not been architected to address the volume and pace of change that was suddenly required, and dated core systems struggled under the added weight.
Relief programs such as the Payment Protection Program (PPP) in the U.S. saw tremendous demand, but loan document processing, manual reviews, and approvals became bottlenecks. As the credit needs of small and medium businesses surged, lenders faced challenges updating their legacy underwriting and risk management systems to meet the demands. Batch-based, fragmented, and slow-moving information and data pipelines hindered the ability to gain real-time insights and rapid response to customer needs.
As financial services rallied to overcome what economists were calling “The Great Shutdown” or “The Coronavirus Recession,” the need for modern, agile, scalable, secure, resilient technology infrastructures became abundantly clear—and the new imperative in 2021.
2. Banking goes beyond cash with digital engagement
The role of cash in society was in flux before 2020, with contactless payments already a way of life across Europe and Asia. Even in America, which has been resistant to move away from cash, 27% of U.S. businesses reported an increase in contactless payments by customers as a result of the pandemic, according to an April 2020 survey. That trend will continue in 2021, with 74% of global consumers saying they will use contactless payment methods even after the pandemic. Globally, the contactless payment market size is expected to grow from $10.3 billion in 2020 to $18 billion by 2025, at a compound annual growth rate (CAGR) of 11.7% during the forecast period.
This trend toward contactless finances extends to banking. In 2020, 44% of retail banking customers relied on mobile apps to conduct business. Both traditional players and financial tech firms introduced new finance apps or upgraded existing ones to offer new services and programs to match consumer needs, such as benefit tracking for government-sponsored food allowances or access to early wages. As downloads of mobile apps soared, transaction volumes skyrocketed.
In 2020, faced with a major health crisis, economic distress, and an uncertain future, insurance companies redefined how they did business almost overnight to provide stability, comfort, and peace of mind for their customers. For example, auto insurance providers offered discounts or refunds given decreased levels of driving. Health insurance companies adjusted their premiums to reflect reductions in non-essential surgeries.
It has become clearer than ever that the most useful products are tailored to the specific needs of the customer, and that hyper-personalization will continue to define the customer journey in 2021. Auto insurance products are more valuable when they are based on miles driven. Home insurance products are more effective when they are integrated with connected homes, so that they can prevent or minimize damage from water leaks or fires.
Building this level of personalization for customers requires a technology infrastructure that enables real-time insights from vast amounts of streaming data from a variety of data sources. Data and analytics, powered by AI, will enable personalized, contextualized interactions across the entire insurance life cycle, from sales and underwriting, to claims management and support.
4. Institutional and wholesale trading moves off trading floors
Suddenly, trading was no longer confined to corporate trading floors. While a small handful of firms positioned their traders as “essential workers” and required them to work on site, the majority of firms allowed traders work from the safety of their homes. As trading floors and exchanges worldwide emptied, the prior assumptions that all trading will happen from physical offices—over corporate networks and enterprise-operated data centers—were suddenly rendered obsolete. Operational resilience plans that counted on falling back to a secondary disaster recovery site became useless when all corporate sites shut down.
In the new world, financial architectures will decouple financial activities from physical facilities through the use of technologies like zero-trust networks that enable location-independent secure access. Operational resilience plans will be updated to include globally and regionally resilient infrastructures like cloud.
Related: The adoption of zero trust is an imperative for security modernization. Learn more about BeyondCorp Enterprise, Google’s comprehensive zero trust product offering.
5. Work-from-home must work across financial services
Throughout 2020, widespread stay-at-home restrictions challenged businesses everywhere to keep employees engaged, productive, and connected. With the pandemic, as corporate offices became unavailable overnight, the entire financial services workforce—from traders to bankers to support personnel—relied on their at-home internet connections along with existing VPN and virtual desktop infrastructure solutions to do their work. While it got the job done, internet connectivity issues, bandwidth limitations, security concerns, interoperability problems, and limitations in collaboration capabilities plagued the day-to-day experience.
It will take a reimagined work environment—one that combines immersive digital and mobile experiences with flexible hardware—to support in-person and remote workers.
Work-from-anywhere solutions need to take a comprehensive look at seamlessly enabling a heterogeneous, globally distributed workforce, including traders who need high-speed connectivity, quantitative analysts who need vast amounts of compute capacity, retail branch workers who need responsive insights platforms to serve customers, and more.
It will take a reimagined work environment—one that combines immersive digital and mobile experiences with flexible hardware—to support in-person and remote workers. New ways of hybrid working and connecting with customers will also lean heavily on helpful, integrated tools centered on the cloud to level traditional boundaries in 2021.
6. Embedded innovation is the new status quo
While 2020 was bleak from many perspectives, one of the rare positives is that it helped prove that agility and innovation, done right, is a game changer. The speed at which the financial services industry transformed to help their customers through the pandemic is the speed at which they want to continue operating. And that requires a culture of innovation that is embedded into the corporate culture of an institution.
From financial services institutions to vendors, regulators, and supervisors, 2021 is likely to be a year of deliberate cultural transformation to find new ways of working together to create safer, cheaper, more inclusive, and more equitable financial markets.
This year at Google Cloud, we will continue working with our customers across financial services to help them prepare for the future, through our technology, tools and innovation partnerships.
Keep learning: Discover the steps any organization can take to quickly adapt and achieve positive results with tighter resources. Get Google’s Guide to Innovation.
Ulku Rowe Ulku Rowe, Technical Director, Office of the CTO, Google Cloud
At the forefront of Google’s cloud and machine learning capabilities, Ulku enables the financial services industry to take advantage of Google’s technology to fuel their digital transformation. Before joining Google, Ulku was a Managing Director of Technology at J.P. Morgan Chase and Bank of America. Ulku holds an MS degree in Computer Science from the University of Illinois at Urbana-Champaign and a BS degree in Computer Engineering. She also serves on the Federal Reserve Bank of New York Fintech Advisory Group.
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The Organization for Economic Cooperation and Development (OECD) conducted a study to determine which countries offered their workers the best balance between personal life and work life . The researchers considered a number of factors including average work hours , personal time, and number of working moms. In the end, the Netherlands took first place with a rating of 9.3 out of 10, while several countries in America ended up presenting a very bad rating.
Not being able to balance work and life can put your health at risk. In fact, many studies have shown that people who work long hours and do not have time for themselves have a 33 percent greater chance of having a heart attack, and a 13 percent greater risk of cardiovascular disease. Fortunately, there are many ways to balance your personal and business life to protect your health .
Put into practice the following tips that will change your life:
1. Get rid of unnecessary activities
Many entrepreneurs work longer hours than they should because they are wasting their time on unnecessary or low-value activities. Find out if this is your problem by recording every minute of your time for a few days. Then review what you wrote down and identify the activities that do not add value.
Eliminate distractions like checking social media or taking personal calls while you work. These activities may not take you more than a couple of minutes, but they add up. You should also analyze if you are wasting a lot of time on activities that someone else could do. For example, if you are wasting time going to the supermarket, maybe you could hire someone to do it or order the supermarket at home.
Getting the most out of every minute of the day is essential to find the balance between work and personal life. By cutting back on non-value-added activities like distractions and errands, you can work fewer hours and take care of your health.
2. Schedule social activities on a recurring basis
Studies have shown that having an active social life is important for health. People who isolate themselves from others increase their chances of dying sooner by fifty percent. But making time for social activities can be tricky, especially when you’re trying to grow a business. One way to overcome this is by scheduling recurring social activities with your closest friends.
For example, plan to have one dinner a month with a group of friends. Put this activity on your calendar, and now you can organize your work schedule around dinner, and not the other way around. This strategy is effective because it forces you to make time to disconnect and have fun with your friends. Think of this social activity as a meeting with an important client, something you can’t cancel regardless of how busy you are.
3. Learn healthy ways to cope with stress
Being an entrepreneur is stressful. No matter how many activities you cut off your list or how often you see your friends, you can’t escape stress. Chronic stress has a negative impact on your mind and body, which can lead to dangerous health conditions such as cardiovascular disease or high blood pressure. But this does not mean that living under stress will shorten your life expectancy. The key to finding a balance between work and health is learning to manage stress.
Get into the habit of taking a step back from stressful situations, just for a few moments to calm down and collect your thoughts. For example, let’s say a client sends you an email demanding something almost impossible. If you feel like your heart is racing and your blood is starting to spike everywhere, get up from the computer and take a walk, even through your office. If you can go for a walk, do it to calm the thoughts that were accumulating in your head. Going for a walk, even for a few minutes, reduces stress and brings clarity to the head.
Dr. Michael Galitzer, author and physician, recommends entrepreneurs to practice deep breathing to relieve stress. Put one hand on your stomach and one on your chest. Begin to breathe deeply from the abdomen to fill your lungs with air. As you slowly breathe in and out, focus on how your abdomen rises and falls. This will make you focus on something other than what is causing you stress and it will be easier to calm you down. Inhale for a count of four, hold the breath for another four seconds, and then exhale for a count of four. Using one of these methods to deal with stress can calm your mind so that you are better prepared to handle the situation that stressed you out.
As an entrepreneur, you are most likely not used to putting yourself first. But it is important to understand that doing so does not mean putting your business aside. By following these tips, you can find the perfect balance between your work and your health, and be more successful than ever in the business world.
For my upcoming book “Financially Forward,” I’ve read every cryptocurrency-related text I can get my hands on, watched dozens of videos and interviewed countless leading entrepreneurs — all with an eye toward taking a balanced, informed approach to the possibilities ahead.
It’s easy to over-exaggerate the potential of blockchain. But, the technology behind crypto-currencies such as Bitcoin has the potential to drive significant social shifts.
Here’s a closer look at what this may mean for our wallets.
1. No More Middlemen
Today, when it comes to managing our money (or processing just about any transaction), middlemen abound. There are banks, credit card processors, payment platforms, stock exchanges — the list goes on. Everywhere you look, entities are standing between both sides of every transaction we carry out. And in many cases, one or more of them is taking a cut or charging a fee.
Take a credit card transaction, for example. Your credit card issuer (e.g., Chase) and payment processing network (e.g., Visa) manages the transaction. The store where you make a purchase uses a point of sale system (e.g., Square) and pays a transaction fee. That’s a lot of cooks in the kitchen for a straightforward exchange of funds to buy something simple like a coffee.
With blockchain, those middlemen could disappear. One of blockchain’s main features is that it’s decentralized — meaning that you can transact directly with the producer of the item you want to buy, no bank or credit card needed. Transaction fees are no longer a part of the equation. Think about how much money that could put back in your wallet! And more importantly, how much this simplifies the transactions we make — giving us more clarity into where our dollars go.
2. Smart Contracts
Today, executing a contract is a rigorous process that involves lawyers and headaches. Think about buying a house. You have brokers, real estate and bank lawyers, the deed company — the closing process involves a ton of people, and mountains of paperwork (and of course, legal fees).
But blockchain can eliminate just about all of it. You don’t need all of those records and documents; the blockchain stores all the information. Buying something like a house becomes seamless. Contracts can be automated and direct. By reducing the time it takes to buy and sell, property can suddenly become a more liquid and accessible asset for consumers, pushing transaction costs down, and allowing consumers to more easily tap into their home equity.
Blockchain, in other words, takes power out of the hands of institutions and puts it into the hands of the consumer.
3. A More Secure, More Streamlined Wallet
It’s no surprise that so many people fall victim to credit card fraud. We all know that if someone walks into a store and tries to buy something with your credit card, the cashier barely glances at the name on the card, let alone the signature. The company might assume something is fishy and send you a fraud alert — or perhaps you check your statement a week later and notice that something is wrong. All told, it takes days for a transaction to be tracked and verified as fraudulent, another day or two for your new card (to replace the one you had to cancel) to arrive.
But all of that could be streamlined with blockchain. Because transaction records are permanent and immutable, there isn’t a question about who is involved in a transaction.
With blockchain, our phones could store not just our credit cards and passwords, but our medical records and our prescriptions, and even the “keys” to our car and home. Your identity will be fundamentally managed in one spot.
Once these disruptions start to change the way we as individuals interact with money, the next phase will be disruption across industries and society.
But while blockchain holds the potential to put more and more power into the hands of individuals, that doesn’t mean it’s going to be easy. These new technologies are endlessly complex — but the possibility for innovation is endless, too.
It’s not about how much money you earn. It’s what you do with the money that matters. In this video, I’m going to show you a business strategy on how to manage your money. I’m not gonna tell you what to invest in. That’s not my role. Here are the best ideas of what the best professionals do to manage their money. Learn more from Tom LIVE at the next Summit event: https://tfi.media/2UC21rg
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