Year of progress ahead for financial services innovation

The pace of innovation in the financial services sector is strong according to the research and consulting group Celent, which invited innovation professionals from firms within the industry to provide their outlook for 2017 in an online survey.

“The participants are all innovation practitioners who bring a current and practical perspective to their predictions,” reports Celent. “Their feedback is valuable for financial services leaders who want to benchmark and advance the innovation capabilities in their firms.”

The group posed three key questions to survey participants:

  • What are some key benchmark characteristics of innovation programmes in financial services?
  • In which areas will innovation investment increase/decrease in 2017?
  • In 2017, will financial services innovation be easier or harder?

The responses are contained in a report titled Innovation Outlook 2017: Making Progress, written by Mike Fitzgerald, a senior analyst in Celent’s insurance practice.

“Innovation continued to gain traction in 2016,”the group comments. “Customer expectations, the imperative of digital transformation, regulatory scrutiny, growth needs in the face of increasing competition, and expense pressures provide impetus for change.

“Additionally, emerging technology provides opportunities. The rise of sensors and intelligent digital ecosystems blur the boundaries between the digital and physical worlds and generate massive new data sources. Next-generation analytics and artificial intelligence [AI] are coming on stream to harness that data and provide new services to prospects and clients.”

The report concludes that the need for effective innovation in financial services will continue to accelerate. Programmes participating in the survey are between two and three years old, focus on incremental innovation, and budget for innovation as part of their technology spending.

Investment in technology enabling innovation and spending on external and internal staff are the areas expected to see the largest increases.

“These innovation professionals are optimistic about 2017,” said Fitzgerald. “They expect that customer expectations will continue to grow and provide opportunities for innovative firms to gain market share.

“Work remains to be done, however. Practitioners expressed concern about funding sources and acceptance of experimentation by their organisations.”

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