Thursday, 6 July 2017

Three issues how Finnish financial and insurance sector is changing from IT strategy perspective

Sunny July,

Just before heading towards well-earned vacation after closing our latest M&A and outsourcing deals including representing A-Katsastus in their infra outsourcing to Atos (see press release from here) and representing K & T Neutech in their business purchase with  Internet Planeetta Oy (press release here), I think there is enough time for one more post. I was asked this question last week and I thought it might be a good idea to share some thoughts on this. This is not really a topic I have thoroughly though through but more like some views I have on the situation and what I remember reading somewhere, so feel free to contribute if you have additional viewpoints or if you agree or disagree:

In the banking and financial sector, there seems to be three points driving changes:
  • First, particularly in the Nordic countries, cost-efficiency is obviously just one of the main concerns, causing constant changes.
  • Second, regulatory changes create another source of changes and, while the financial sector alone already has a rather heavy regulatory burden on its shoulders, this is an area where also other regulatory changes, such as privacy, cause additional work.
  • Third, as the most interesting one, come digitalisation and new services. All users, me included, create a demand for enhanced user experience and we, too, wish to utilise new channels. 
Well, what could come out of this? I would say there are several interesting new questions to ask which are more strategic in nature:
  • Regarding the first point, there might be a need for more BPO-based models to drive costs down. In addition, one could say that large and small banks are in slightly different positions in this respect: while larger banks are able to create more of their proprietary solutions, the smaller and medium-size banks are under more pressure to adopt standardised solutions. Anyway, my estimate is that the difference between large and small banks will grow while in both cases the unifying factor is the utilisation of cloud architecture.
  • Consumer behaviour has changed and, as said, we all require more; I would expect to see more customised offers based on increased usage of customer data, perhaps increased SLAs? And naturally omni-channelism, as mentioned above, is an element, as well as time-to-market. In the world of IT projects, this might mean adoption of more bimodal approaches in order to be more responsive to market needs.
  • Banking as a service—are the leading banking software solutions sufficiently good? Are these enough to create strategic advantage?
Because of the above reasons, I would claim that strategic partner fit is increased and obviously data conversion remains one of the focus areas and an issue to be solved in any contract (and this is not really specific for banking sector). In any case, to conclude, I would say that in any IT acquisition process all these issues need to be carefully considered and already taken into account in the RFIs and RFPs and as a lawyer also to truly understand the business to create additional value!

For those who are already on vacation or soon leaving for one like me, I hope relaxing times and next time I will write the second part of those cloud services as I promised in one of my earlier posting!