IT-enabled financial services are often comprised of a few key groups: financial institutions and their users, both of whom generate and use data. This set of interactions predated digital technologies. When IT was first implemented, it was to support existing business needs by use of computerized tools like networks and databases.
As those systems grew, supported by their IT infrastructure, the complexity level increased exponentially.
Such systems, having not had the luxury of being designed from scratch, reflected analog business paradigms and were shaped by the presence of multiple incompatible legacy systems. Because of their vulnerabilities and how difficult they were to understand, these systems were closed to each other, proprietary and difficult for end users to access and manipulate. These limitations meant that IT was applied to accelerate analog business offerings, but did not create opportunities for new, digital-enabled value.
The major opportunity for technology to create new value in the financial services industry lies in creating and expanding digital platforms. Digital financial platforms enable multiple, interlocking systems to connect with each other. In their overlap and interconnection we can see entirely new opportunities to create value—along with new implications for technology tools and business decision makers.
In the financial world, players might include end users, reselling agents, banks, regulators, reputation data, APIs (application program interfaces), open source software and hardware, app developers and even smart currencies.
New digital financial platforms allow organizations to quickly provide or tap into crowdfunding, credit scoring, payment systems, individual data profiles (or little data), big data (the collection of all that little data), risk management, adjacent opportunities (like cross-selling related products much more effectively, or highly-automated investment of cash float), social media listening and conversation, social identity schemas and reputation management. Each could be its own piece of content, but it’s important to see how so many of them stem from—and then drive—digital business.
This combining and splitting allows new parties to take advantage of their strongest innovation capabilities, be that branding, or gathering new users through community-building, or process and data optimization—letting other parties take on the other important parts of value creation, like stable, scalable back-end systems and legal or regulatory evolution.