Deloitte has published a report on the future of financial services “A higher bottom line. The future of financial services”, in which the company’s experts name the main challenges and promising technologies for banks and financial companies for the next 10 years. Frank Media reports several theses from the report.

In that period, the following areas will play the key role: resolution of social problems; increase of clients’ trust; strengthening the control over personal data, and more careful use of it; change of approach to clients, which includes the ability to maintain and satisfy growing expectations; search for new revenue sources in cooperation with fintech companies and digital giants; creation of alliances; and development of ecosystems.

A recent survey of 195 U.S. financial institution leaders found that more than three-quarters felt that the pandemic uncovered shortcomings in their firms’ digital capabilities. Respondents also cited cloud, cybersecurity and data privacy, and data analytics as areas their companies prioritized for increased investment.

The future of finance. Technological innovation will drastically change the financial services industry, for example:

- Machine learning will allow banks and investment managers to provide customers with hyper-personalized spending and investing recommendations and take proactive actions on their behalf to maximize their long-term financial wellbeing.

- Blockchain will provide customers the ability to seamlessly and instantly exchange value and perform transactions in more transparent, secure, and distributed ways.

- IoT will help insurers and other financial services providers more seamlessly integrate into the lives of their customers, much the way fitness and health providers have.

- AI-powered advisers and new platforms will reach customers who were previously unable to access investment opportunities.

- Advancements in 5G and subsequent generation infrastructure will enable latency-free mobile access to financial services offerings through wearable and embedded interfaces.

Regulations. Over the next decade, regulation will continue to play a critical role in shaping the financial services industry and its ability to respond to new technology. While regulation can often lag innovation and society’s expectations, authorities are increasingly receptive to advancements that spur competition, enable broader access to financial services, and prioritize data privacy and security

Data access. Access to data flows is becoming a critical resource. Financial institutions and banks’ ability to design solutions and business models that meet customer expectations and enable integration across organizations will hinge on access to and insights from flows of data. Data is becoming a key factor of creating value.

EU regulators have already proposed making it easier for companies to gain access to each other’s data as a means of promoting innovation, such as encouraging manufacturing, energy, agriculture, and health care businesses to engage in a “single market for data”, Deloitte experts write.

The more effective financial services companies are at harnessing data, the greater the advantage they’ll have in attracting and retaining customers. On the flip side, the more data that firms collect (and customers agree to share), the higher the risk that the data will be compromised. To remain competitive, financial services players will need to reinvent their existing data strategies and tools and balance cooperative data-sharing through alliances with maintaining stringent control over proprietary information.

Lack of experts. The U.S. financial services industry is expected to face the greatest talent gap of any sector, with a deficit of 1.7 million workers, Deloitte estimates. Some talent shortages will be in already-prioritized areas like data science, AI, and UCD (user-centered design).

Deeply human skills—like creativity, critical thinking, collaboration, and emotional intelligence—will also be critical, as they are integral to understanding and effectively interacting with customers and other stakeholders in ways that are difficult to automate. The financial services industry will see emergence of “superjobs”– roles that aggregate jobs previously performed by multiple people.

In a recent Deloitte survey, 72% of financial services executives identified “the ability of their people to adapt, reskill, and assume new roles” as a high-priority item to navigate future disruptions, and the number of leaders highlighting the need to transform worker roles has doubled since the onset of the pandemic.

The pandemic has changed the approach to labor management: for many banks, it is normal now to see staff switch to remote working.

Ecosystems. The marketplace of 2030 will be unprecedentedly fluid and interdependent, marked by ever-changing customers with ever-changing needs, expansive data flows, and mass shifts in the workforce. Innovative business models and alliance ecosystems will be required to respond to these imperatives and create new revenue streams. What the experts expect to emerge are consolidated “one-stop shop” platforms for offering and accessing various financial products and services, ranging from student and business loans to home mortgages, insurance coverage, retirement plans, and investment vehicles. These platforms will act as a central nervous system coordinating data flows, allowing platform owners and third-party offerings to consolidate.

Banks and companies that move early to establish alliance ecosystems will secure significant advantages, Deloitte writes.

The recent launch of Google’s Plex bank account, in partnership with several banks, is an example of this kind of emerging cross-industry alliance. This product lets users open bank accounts, pay friends, and manage budgets through a new version of the Google Pay app, Deloitte notes.

Deloitte concludes that while financial services firms tend to view each other purely as competitors, and as a result build defensive walls, a more effective approach is to form new relationships that enable the co-creation of innovative, human-centered offerings.

The partner of Fintech section is