Pravin Vijay, Senior Solutions Engineer – financial services, at Zayo Group
Although its history dates back before the rise of the Roman Empire, the financial services industry is one that has long been at the forefront of innovation. This is driven by evolving consumer expectations of the retail and Investment banks.
Some might find that surprising due to a misconception that the industry is set in its ways. But you just have to look at its adoption of AI to see how open to new technology this sector is. The Economist Intelligence Unit’s data highlights that 85% of senior banking IT professionals have a clear strategy for adopting AI in the development of new services and products.
That, alongside Gartner predicting worldwide banking sector’s, IT spend will reach $652.1bn by the end of 2023. This means it’s clear that the sector needs to ensure this heavy investment into technology isn’t being spent on fads, but instead, long-term trends which benefit the business, its employees and the client portfolio. Therefore, it’s critical to be able to determine the trends from the fads.
Trend spotting
Trends are long-term shifts and industry-wide, as opposed to fads which are often the result of a short-term surge in demand, or a hype that makes an impact- neither of which bring clear value to the table.
For example, cloud computing and subscription based services now impact almost every element of our working lives. Even further, when we’re finished with work for the day, we tend to rely on cloud supplemented subscription services to stream our favourite content. This is very much a trend which has weaved its way into our everyday lexicon and the natural order of how we go about our lives.
On the other side of the coin, fads tend to come about due to a potentially unforeseen change, such as legal regulations that financial institutions simply have to get used to – such as MiFID II or the Digital Operations Resilience Act.
You can see the potential issues already, especially when you consider the issues that can be caused when such compliance deadlines are regularly pushed back. The most forward-looking accountancy firms were preparing for Making Tax Digital in 2015, yet the latest delay has pushed the next deadline back to April 2026.
It’s also important to note that what can be deemed a fad at first can become a trend over time. Look at AI for example – we’ve been talking about it for decades but today it’s a true game changer because it can actually solve business problems in all sectors. The reason this didn’t happen overnight; AI needed to become a proven entity that adds value to the financial services industry. AI needed to understand highly technological language, while cloud computing provided the computational horsepower and connections to the facts, audio and visual data required to train AI models.
Only once this was available could AI move away from businesses providing low level chatbots, that were little more than active FAQs on a website, to a true trend. When AI was “just a fad”, it was simply a case of either it not being ready for the world, or the world not being ready for it. Arguably both in the case of AI. It’s the perfect illustration that the time has to be right for some ideas to germinate, while the technology infrastructure has to be at a level to allow the technology to evolve.
Building the foundations for thriving tech trends
While differentiating between trends and fads is key to the long-term success of organisations within the highly competitive financial services industry, it’s just as important – if not more so – to ensure the foundations have been laid for success before investing. Failing to do so is akin to building a house on faulty foundations, which inevitably results in issues further down the line.
Those foundations – namely agile network infrastructure – should be introduced after looking not only at the immediate and short-term gains of investing in a particular trend, but also the benefits it’ll have in the decades that follow. This is where we are with AI now – businesses are enjoying the productivity gains of generative AI, yet too few are looking to optimise their tech stacks to get ahead of the competition and prepare for the undoubted benefits automation and machine learning will provide in the next 15 – 20 years.
This is why technology leaders should evaluate how they can future-proof their tech stacks by focusing on building an environment where the opportunities presented by emerging trends can be grabbed with both hands, not squandered due to a short-term focus.
