South Africa’s financial services sector – complemented by a fast-growing and agile fintech community – is internationally recognised as highly sophisticated and the most developed and liquid in Africa. Yet, not all traditional banks and financial service (FS) providers have been able to adapt to the disruption brought by technological advancements, changing consumer behaviours, and global economic shifts.
For these players, it comes down to being agile and able to adapt to stay ahead of the curve. As Charles Darwin said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”
Challenges in the finance sector
For businesses to succeed, they will have to face challenges head-on and adapt their business models and workforces. Here’s what to prepare for:
Rapid technology changes
Innovative new technologies shape products, services, customer interaction, and data use. According to global consultancy firm Oliver Wyman, nearly a third of the top 50 financial institutions are now data and technology firms rather than regulated “balance sheet firms.”
A complex regulatory environment
Due to the increased cybersecurity threats and the operational challenges many businesses face, modern regulatory requirements – already complex in South Africa – keep changing, meaning FS providers must continuously adapt to new processes and technology to meet the requirements.
Changes in consumer behaviour
Across the world, consumers are demanding higher levels of convenience, personalised service, and security. By 2024, it is expected that 61% of all business done with banks will be digital; branch usage will continue to decline; younger customers will demand a mobile-first banking experience, and FS providers will have to create more flexible products.
Fintech is more nimble
Fintech products are already prepared to be adaptive. They can leverage modern technology to meet the changing needs of customers better, and their business models (such as operating digitally only) allow them to scale up quickly. Older, larger, or more established providers often have a harder time embracing digital transformation, which means they’re at risk of losing existing customers to newer FS providers.
Solutions to these challenges
In their vision for the financial services industry in 2030, Deloitte identified seven forces that will drive transformation and to which financial services will have to adapt to create a new, human-centric forefront for the financial services industry. These are:
- Technology tools and systems: 5G, artificial intelligence, machine learning, blockchain, and smart algorithms will improve customer interfaces, allow for the aggregation of huge chunks of data, and enable open collaboration.
- Social responsibility: Companies’ commitment to a net-positive social impact (giving more than you take) will determine their ability to attract workers, drive profits, raise capital, manage risks, navigate regulatory scrutiny, and sustain growth.
- Regulation: This will play a critical role in the financial services industry’s ability to respond to new technology by supporting financial services experimentation and the adoption of foreign regulatory innovations, such as open banking.
- Data flows and insights: Access to and insights from ever-increasing flows of data will allow financial institutions to design solutions and business models that meet customer expectations and enable integration across organisations.
- Work and workplace innovation: In addition to data science, AI, and human-centred design, deeply human skills will be critical to understanding and interacting with customers and stakeholders in ways that are difficult to automate.
- Customer expectations: Customer behaviours, needs and wants will continue to evolve, and through new technology and an augmented workforce, FS players will be empowered to be more direct, personalised, and socially responsible.
- Platforms and business models. Innovative business models and alliance ecosystems must adapt and respond to ever-changing customers, mass shifts in the workforce, and expansive data flows to create new revenue streams and gain a strategic advantage.
The human factor in the finance sector
According to the WEF Future of Work report, one in five of all jobs in financial services are at risk of disappearing, and half of all FS employees can expect to see their jobs change. These companies will be scrambling to meet the growing need for new skills and capabilities, and only those employees with good soft skills, such as adaptability, will weather the storm.
Here are the key traits that make an employee highly adaptable:
- Resourcefulness, thinking out of the box and daring to be flexible and different in how they think make people more adaptable to change.
- Self-discipline and remaining focused, along with time management, a positive mindset and the ability to identify obstacles and limit distractions, ensure they don’t get overwhelmed by change.
- Resilience and willingness to remain flexible and adaptable to the needs and demands of customers will prevent them from being thrown off track and enable them to bounce back from setbacks.
- Having a vision and being clear on goals and how to get there, yet being aware of limitations, are key traits of adaptable leaders.
Prepare your FS team for a changing industry
At MasterStart, we work with industry leaders to design courses that are future-focused. By upskilling your workforce in Digital Transformation, FinTech, Data Analysis, Leadership, Power Skills, and AI, we give you the tools to adapt to an exciting new world and ensure you, your employees and your business are never left behind.
Browse our categories as you plan your L&D for the remainder of the year, and contact us if you’d like to find out more.