Rocky Scopelliti, Telstra’s global industry executive for banking, finance and insurance, says Australian consumers are rapidly adopting change in the way they pay for goods and services.
Scopelliti’s recent report, Millennials, Mobiles & Money, examines how demographic change and digital technologies are impacting the financial services sector, and why Millennials aged 18 to 34 are driving the cashless era.
“Millennials are now the largest demographic group on the planet (one in three people),” he says. “And for financial services it's very, very important to think about their needs.”
Servicing all demographic groups will depend on how the industry manages change and, in Australia, the pace of changeis rapid – as demonstrated in the consumption of cash is declining at a rate of about five per cent per annum.
National Australia Bank CIO David Boyle says adopting technologies that help our customers is something the banking industry has historically been very good at; however, what's changing today is the speed at which those new inventions are coming.
“Keeping up with the pace at which we need to be introducing new services is a current challenge, but our industry needs to continue to drive innovation at the pace our customers expect us to,” Boyle says.
It’s a mobile-first world
With the technology available to perform a payment or transaction from anywhere now commonplace, the financial services industry must adopt mobile-first strategy to remain relevant and empower other industries to follow suit.
David Gillespie, CIO at life insurance company TAL, says improving customer engagement is a key strategy for the industry and mobile is a critical channel for enabling customers to interact with their providers.
“As people adopt new technologies and new mobile capabilities, they want to have access to everything at any time they want,” Gillespie says. “When they want things online we need to provide that as much as possible.”
Likewise, Andrew Hopkins, head of IT strategy, architecture and performance management at insurance company QBE, says digital payments together with mobile technology have the power to revolutionise business processes, particularly claims.
For example, if a policy holder posts pictures of damage to property, the claim can be assessed without the need to send someone in person. Payment is then processed straight away thanks to a “smart” contract and contactless payment technology.
“You as a consumer are more delighted because you’ve not had to pick up the phone, you've not even had to go to your mobile app, it's just happened,” Hopkins says.
Towards an agile future
With digital payment technology pointing to a cashless future, the ability for financial services firms to innovate quickly will rely more on software delivered over intelligent secure networks through managed services business models.
Hopkins says other innovations in payments will involve block chain technology and artificial intelligence, where a decision to make a payment is made without human intervention.
This sort of technology promises significant improvement in the productivity of value chains when it comes to trade finance, or the way consumers deal with small businesses, Scopelliti says.
“In the last five years we've seen more than $30 billion invested in fintech [and] more than 12,000 startups begin worldwide,” he says. “We're now seeing accelerator programmes opening up in all parts of the world so we are living in a very exciting period of innovation in financial services.”