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Innovation

The Future of FinTech is Human

State Street

January 16,2017

In the race to be the most tech savvy financial institution around, companies are investing millions of dollars in the creation of artificial intelligence, natural language processing, semantic data modeling, real-time analytics and more.

And if they can't build it themselves, they are happy to buy it from the multitude of FinTech companies willing to do the heavy lifting. It's almost irresponsible to say "that's never going to happen" because technology that once only existed in Sci-Fi novels is now gracing the desks of financial services employees.

But if we only focus on the race and not the end goal, we will miss the point of the whole process–people.

The institutional investment industry is beholden to human shareholders, and at some point someone has got to talk to them and ask them what they want. We have the technology, but the industry as a whole needs to focus on the integrity of the experience. The idea of human-centered design is being championed by the world’s biggest tech leaders, and while the financial services industry has been eager to adopt most of the back-end technology coming out of Silicon Valley, we are slower to adopt the front-facing user interface and design thinking progress that is also being developed.

With retail banks, there is a growing push behind the idea of "customer delight," focusing on personalization and customization. Retail banks tell their clients, "we don’t offer one-size-fits-all solutions; we offer what-fits-you solutions”"and their client-facing systems reflect that. You can now deposit a check simply by taking a picture of it from your phone! If that isn’t creating a better user experience then I don’t know what is. It’s such a simple concept–make it easy for people to do business with you–yet in the institutional space that has not been the primary focus. Institutional clients should expect a great user experience rather than accept legacy user interfaces.

We know that it takes a combination of technology, people, insights and experience to create opportunity and drive long-term value in a digital age. It takes asset intelligence.

We’ve found that client demands for increased transparency on how their money is managed are having a major impact on business strategy. But almost no one is demanding 100 GB Excel spreadsheets of raw numbers. People want to be able to easily see exactly what percentage of their holdings are in funds out of Brazil, how much money is illiquid at this very moment and the long-term benefit to investing in a basic materials fund rather than an infrastructure ESG. The data means nothing if there is no comprehensive story behind it.  We need to give our clients a data experience, not just reports.

Design thinking is still a foreign language for many institutions. But it shouldn't be. Design thinking is powerful because it forces you to put your client at the center of your decision making, which drives true stewardship. Clients don’t want to be talked at; they don’t want to be buried in reports. They want to be engaged. Thanks to advancements in machine learning, some robo-advisors can provide a more human-friendly experience than some asset managers do! How can we leverage the power of our people if we don’t make a personal commitment to them?

Why is the financial services industry investing so heavily in the back-end (the raw data) and not also enhancing the front-end (the user experience)? Our research indicates that, across all institutions, 35 percent say they are ineffective at sharing data from back to front office. Yet approximately half of all institutions expect to increase the amount of data they disclose publicly and the frequency of reporting. So even though we are improving in both our ability to capture more data AND process it, when it comes to sharing that information with the people that really need it, human clients and regulators, something is still missing.

It's not that we can’t rely on technology. But if we automate and innovate for tech's sake only, then we're creating nothing but more noise. We know that it takes a combination of technology, people, insights and experience to create opportunity and drive long-term value in a digital age. It takes asset intelligence.

Topics: Fintech


State Street

We are a leading financial services provider serving some of the world’s most sophisticated institutions.