If we look at the successful financial services incumbents and FinTechs, you can see that technology is at the centre of what they do. 

In these companies, the silos separating tech and business functions have been broken down. This means that if you are in a leadership position at a traditional bank or a FinTech startup, it pays to have a solid knowledge of technology and how it affects your business. 

Being tech-literate doesn’t mean you know how to code in Java, Elixir or any of the other programming languages being used in the industry. It is more about knowing what your tech team does and why they do it. 

Being able to actively participate in the higher level decision-making process means you need to understand the risk-benefit analysis and trade-offs that affect technology choice and how data flows within your organisation. 

The depth of knowledge required depends on your role and the structure of your organisation – a FinTech founder is going to need to be able to input more thoughts on the details of the tech stack than someone in the C-suite at an incumbent, for example. 

No matter where in this spectrum you currently sit, being able to ask questions to your internal team and potential tech suppliers can only help enable better decision-making:

  • Is the product or service we want available off the shelf or do we need to build it?
  • Do we have capacity/know-how to do it in-house? 
  • How can we avoid vendor lock-in?
  • Will this scale, be future-proof and minimise technical debt?
  • Where are the opportunities in emerging technology and what do we do about them?

Your CTO/CIO/tech lead will be the go-to person to make these calls but if the buck stops with you, or you’re the head of the business, you will want to be aware of the decision-making process and planning behind major tech decisions.

If you still need convincing about how important advances in technology are for the financial service industry you need look no further than to the Far East. AI is especially powerful in the space enabling analysis of big data sets to provide ever more personalised experiences to consumers. Chinese Big Tech firms Baidu, Tencent and Alibaba are using Ai and other emerging technologies with massive success.

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Cryptocurrency is another area that has grown too big to ignore by those in mainstream FS. There’s some way to go until it shed its ‘Wild West’ tag, but the sheer number of people holding crypto means that traditional banks, governments and regulating authorities have it high up on their agendas.

Central bank digital currencies or CBDCs may well prove the gateway drug for banks to get involved in digital currencies. The West is lagging some way behind China and other parts of Asia in this area. The takeaway is if you’re building something in the payments space then why wouldn’t you want to take into account that one day you will need to be able to offer your customers the option to use bitcoin, ethereum et al. or CBDCs?

Something that has become of even greater importance following the pandemic is the importance of cybersecurity: this is best when installed into the culture of the organisation and not placed as the sole responsibility of a single team. 

It’s important that FS firms do not compromise on security in order to enable rapid product development and release to meet expanding customer demands. Trade-offs can be avoided but only when tech strategies are well thought out and the correct choices are made. 

Around customer-centricity, providing slick frictionless banking and financial services experiences is the goal. This makes software engineering central to creating value and to the strategic direction of successful companies. It’s a big shift from the old way of tech focus being about IT maintenance and keeping the lights on (although this still makes up a tremendous proposition of costs).

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The best FinTech firms have more people writing code than their competitors. This is why good developers are in such high demand and are equally hard to recruit. The best devs have their pick of industries and companies to work for and you need to set the right environment and culture to both attract and retain them. Key to this is having an engineering mindset in the organisation where people are encouraged to test new ideas and are not inhibited by fear of failure. 

These are spaces that business leaders need to be monitoring and gathering information on because the pace of change and innovation is faster than ever. The caveat to all of this is that people – your customers and employees – are still central to anything good in the industry. 

For example, to make the most of AI and ML you need staff with the necessary know-how to use the tools and, according to the World Economic Forum, more than half (54%) of all employees will require significant reskilling by 2022 to use these new technologies and others.

At the end of the day, technology is a means to an end. The goal should always remain to deliver value to customers, with the tech used to do it secondary.