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Three technologies
that are changing
the financial
services game
And how the workforce
must adapt to take advantage
of these innovations
2
How visionaries are exploiting
digital technology to reshape the
future of financial services
Leading financial services firms are actively looking for new
technologies to achieve efficiency and speed, and offer new services
to customers. Today, in an era where we are seeing exponential
growth in information technology, visionary companies can leverage
digitization and new technologies to reshape and transform the
industry in new directions.
In a digital world, companies can gain scale and capture market
share faster than ever before. Technology is breaking down industry
borders as technology giants, established firms, and innovative start-
ups are all entering the FS world offering novel collaborations and
new services. Human Longevity Inc., for example, is partnering with
Discovery Vitality to offer DNA sequencing for the insurer’s customers
to better understand their health risks¹. AXA in the UK is working
with a technology consortium that is piloting driverless cars². Verisk
Analytics is partnering with General Motors to enable car owners
to share their telematics driving data with their insurer of choice³.
Across the Nordics and Western Europe we see start-ups like Coinify
(a digital currency platform⁴), CrowdCube (crowdsourced equity
investing⁵) and SBDA Group (a machine-learning behavior-prediction
platform⁶) challenging incumbents in the finance sector with a new
take on solutions.
Many of the digital services and solutions that are emerging in
financial services are underpinned by game-changing technologies
with the potential to disrupt traditional offering portfolios, the
way firms operate, and even the industry sectors themselves. The
workforce – the skills required, the way work is performed and
managed, and the way workers are supported by technology – will
not be spared the disruption. This report highlights three emerging
technologies that will play a fundamental role in shaping the
industry right now, over the next few years and over the next
decade: robotics and artificial intelligence (AI), the Internet of
Things (IoT) and Blockchain.
Already, robotics software applications are transforming the accuracy
and speed of previously cumbersome manual tasks. AI is changing the
nature of customer interactions in financial services; some customer
service departments are almost fully virtualized. In addition to speed
and precision, firms are benefiting from lower costs. Furthermore, and
perhaps more importantly, these AI systems can enable organizations
to adapt, scale and respond to ever faster change and innovation in
the digital era.
The exponential rise of the IoT (which refers to all the devices and
sensors connected to the web) is also set to revolutionize many
aspects of the world we live and work in. This proliferation of
connected devices opens up almost endless possibilities for new
business models and applications that are driven by optimizing
the use of resources, improving processes and helping transform
decision-making capabilities. New streams of revenue for insurance
companies will arise as our lives become more and more connected
and immersed in digital, which in turn will influence our habits. The
industry is certainly set to be transformed, as firms will suddenly
be able to offer personalized insurance policies – together with a
broader set of tailored services – that we have never seen before.
Blockchain, though still in its infancy and several years away from
widespread adoption, will drive tremendous change in the financial
sector in the coming years. By producing faster and more secure
transactions through distributed ledgers, it will transform the world
of capital markets. Settlements will take minutes, reconciliation will
be a remnant of the past and middlemen will no longer be needed.
However, its potential extends far beyond currency transactions and
could include asset registries, data security and equity management.
It could even play a role in the political process as a secure,
incorruptible voting platform.
As the impact of these technologies on the financial services
sector grows exponentially, it is of paramount importance that
organizations and their leaders are aware of them and develop an
understanding of how to use them to drive growth, reduce cost and
increase competitiveness in a digital age. In particular, it is essential
that they understand the workforce changes that will be needed
to capitalize on these innovations and to position their organization
for future success.
This report offers a brief introduction to the three technologies and
their relevance to the industry. It also provides guiding steps that can
serve as a launchpad for initiatives that leverage them to create the
winning companies of tomorrow.
3
One of most talked about technological
developments over the past few years is the rapid
advancement of artificial intelligence. Accenture
defines AI as systems and processes that gather
and perceive input or information from their
environment, understand what it means and
act accordingly. Advanced systems also have
the ability to learn by themselves. AI is already
making an impact in business and capturing the
attention of companies everywhere. For instance,
numerous leading technology firms, including
Apple, Tesla, Facebook and Google are already
investing heavily in AI systems. However, its use
extends beyond these technological leaders. AI
is starting to play a role in driving real value
for a broader range of firms, including those in
financial services.
AI covers not just one, but a spectrum of
technologies that work together. These include
facial, speech, and gesture recognition systems,
as well as language processing, robotics, and
machine learning. In essence, these combined
technologies comprise a system that has the
ability to perceive and collect data, analyze it,
and use that analysis to support independent,
informed decisions.
This makes firms smarter and leaner, and enables
them to react and adapt faster in the face of
constant and pervasive change.
Artificial intelligence is changing
the entire financial industry
This makes firms
smarter and leaner, and
enables them to react
and adapt faster in the
face of constant and
pervasive change.
4
Over the short-term
FS companies worldwide are starting to deploy
AI to reduce costs and improve services. For
example, multiple banks and insurers are using
robotic process automation (RPA) software to
improve their operational efficiency. The software
interacts with systems across the organization
following rules-based business processes, just
as humans do in existing IT landscapes. The
automated processes span the life & pensions
and banking industries, from mortgage lending
to data consolidation and data validation. RPA’s
ability to execute these tasks much faster and
more consistently and securely than time-
consuming manual processes enables firms to
improve quality while reducing cost. What’s
more: the software can scale quickly. This means
organizations can respond faster to the ever
shorter innovation and change cycles of the
digital era.
For example, a global bank is using AI to
automate its handling of unmatched invoices.
When performed manually this task spans several
ERP systems, requires multiple validations and
extensive training – factors that contributed to
a set of processes that sometimes took hours
to complete. With automation in place, the
process is 46 percent more efficient, handling per
transaction has dropped by 40 percent and, most
impressively, the accuracy rate is 100 percent.
Over the mid-term
Beyond basic RPA, AI will also enable the
automation of more complex tasks as natural
language processing and deep-learning
technologies improve. These developments
will allow systems, trained with large datasets
of information, to accurately read text (both
structured and unstructured) and identify objects
in pictures that can then be used as input to
solve inquiries or support human decision making.
This has already started to take place in the
insurance industry, where one carrier now
uses a natural language processor to “read”
and determine payouts for patient treatment.
Rather than an employee having to read through
voluminous records and then calculate the
correct reimbursement fee for each patient, the
system scans each record, understands the text,
analyzes the content and calculates the correct
payment. The process for each form has shrunk
from 25 minutes to three minutes – which
includes a 15 second human review to validate
the results of the algorithm.
Over the long(er)-term
Within the next decade, AI will also change the
fundamental nature of customer interactions
in financial services, making some customer
service departments almost fully virtualized.
These systems will leverage several technologies
including natural language processing, sentiment
analyzers, machine learning and analytics to be
able to have advanced conversations (either by
chat or speech) with humans and answer highly
complex inquiries. And perhaps most importantly,
they have the ability to learn from their own
interactions or by observing a human perform a
specific task.
For instance, IPSoft’s virtual agent, Amelia, is a
language processing system that can learn by
reading and listening in more than 20 languages,
and can even detect the emotional state of the
customer through the use of sentiment analysis.
Amelia can address even complex inquiries and
cases covering a broad range of issues, and is able
to leverage machine learning to improve from
each one of its own interactions. If it is unable to
address an inquiry it will escalate the discussion
to a human counterpart, and then observe the
following conversation so that it can learn how
to solve the case the next time it arises. In one
case, a company using Amelia was able to reduce
the size of its call center team by 60 percent.
5
The imperative of adaptability
As we have touched upon earlier and feel it’s
imperative to reiterate, the real value of AI
systems is likely to lie more in their enabling
FS firms to adapt and respond to ever faster
change and innovation in the digital era, than the
significant cost and accuracy improvements they
bring. AI systems can be easily reassigned to new
tasks or upgraded to provide new services. This
will allow companies to quickly shift or pivot to
new circumstances without the need to expend
significant resources and time on intensive
retraining and reorganization efforts that make
change so difficult today.
The imperative of adaptability becomes even more
evident when we look at how AI developments
across industry lines will permanently impact
the FS sector and force adaptations to business
models. For example, how will the automotive
insurance world react to the rise of self-driving
vehicles, where the number of accidents will
be few and the car ownership model could be
radically different from today (collective instead
of personal ownership)?
Machines – the essential new co-workers of
the digital age
The rapidly expanding reach of digital technology,
and the huge volume of data that is being
made available, are opening up unprecedented
opportunities for FS firms. But they are
opportunities which people, on their own, are
unable to get to grips with. Working in tandem
with intelligent machines, however, the scope
of what the FS workforce can achieve becomes
almost limitless.
To realize this vision, leaders need to create
corporate cultures in which technology empowers
their people to evolve, adapt and drive change.
Far from being a dehumanized vision, it is one in
which workers are relieved of the most repetitive
and onerous tasks. This may result in some
jobs being lost. But it will also create numerous
new jobs, in areas ranging from predictive
analytics to programming, monitoring, and
system maintenance.
Machines will take over the heavy lifting, cutting
through complexity to trigger appropriate
actions and aid decision making. Robotic
process automation software will automate
numerous time-consuming and labor-intensive
administrative tasks across both the front
and back offices. Following rules-based logic,
software will sift through multiple applications/
systems across the enterprise and generate
responses to inquiries. For customer service, that
might mean enabling an employee to retrieve
relevant information from several databases
and consolidate the data into a single location.
Similarly, robotics software can track and monitor
customer interactions, sending polite, timely
reminders to customers who have not responded
to communications and requests.
People formerly responsible for these routine
tasks will be moved to roles that require more
nuanced skills and judgment – such as sales,
customer care, high-priority claims assessment
and management. Customer retention, cross-
selling and fraud detection are just a few of
the areas that will benefit enormously from the
collaboration of machines and people – and
that offer the potential for up-skilled workers to
perform more meaningful roles.
AI will undoubtedly transform the FS workplace,
and will impose the need to change jobs,
recruit new talent and retrain incumbents. But
by reinventing what is possible, it will deliver
unimaginable rewards.
6
The availability of huge quantities of real-
time data from embedded sensors, along with
advanced analytics, is enabling businesses in
the financial world to transform their business
models and offer new products. The insurance
industry, in particular, is likely to be impacted
significantly in the next few years by the Internet
of Things. The IoT will bring the customer
experience to the forefront, open the door to an
entirely new class of risk management services,
and also reduce payouts for insurance companies.
In fact, a recent Accenture survey found that 45
percent of insurers cited connected devices as a
driver of revenue within the next three years⁷.
Over the short-term
The IoT already comprises billions of connected
devices across the world, meaning insurers could
have access – in real time – to many behavioral
factors that can shape and determine pricing and
coverage. It will also change the services they
offer to customers.
Take life & health insurance, for example. Today,
premiums are largely calculated according to
aggregates and averages based on individual
circumstances and family history. But, crucially,
none of these calculations are, in any real sense,
personalized. However, wearable connected
technology is radically changing the market.
Because it can constantly record and share
consumers’ health-related habits with insurance
providers, whether it be exercise, quality of sleep,
diet and other lifestyle factors, the IoT will enable
insurers to offer highly personalized discounts
and other incentives for customers who pursue
healthier lifestyle choices.
7
The IoT creates opportunities
for customized products in the
insurance industry
The availability of huge quantities
of real-time data from embedded
sensors, along with advanced
analytics, is enabling businesses
in the financial world to
transform their business models
and offer new products.
This could even extend, as Accenture envisions,
to insurers providing customers with wearable
devices that would enable the insurers to provide
truly personalized plans based on real-time
information, and to encourage behavior likely to
reduce long-term medical expenses. This is in
fact already happening – Generali and John
Hancock, among others, have partnered with the
South African insurer Discovery to incorporate
a reward-based program for healthy behaviors.
In such cases, the insurer actually becomes a
key partner in preventing accidents and
negative outcomes for customers, instead of
just being the back-up plan in the event of
an undesired outcome.
We are already seeing the same trend in other
areas of the insurance world, such the auto and
home insurance sectors. A growing number of
carriers provide their customers with telematics
devices to record their driving patterns. Some
offer real-time and/or retrospective coaching, and
reward less risky drivers with lower premiums or
other benefits. State Farm harnesses both the IoT
and artificial intelligence; it has partnered with
home-monitoring start-up Canary to provide
customers with intelligent home-monitoring
solutions in exchange for lower insurance rates.
And while privacy concerns are often raised in
this context, research shows that customers are
overwhelmingly willing to share their information
if they perceive value from doing so. A recent
study found that 78 percent of insurance
customers are willing to provide relevant
behavioral data in return for a personalized
offering⁸. However, it is critical that insurers
remember that handling such personal data in
a responsible way will be critical to retaining
customer trust in a digital world. It could even
be a potential differentiator in the marketplace.
Over the mid-term
As insurers around the world begin to engage
their customers through the IoT and create
personalized offerings, it is critical that they also
identify ways to manage, store and analyze all
the connected data so that they can use it most
efficiently to create better offerings and services.
However, the true value of the IoT resides in
the ability to collect and analyze data in ways
that enable a business to offer innovative,
differentiated services to its customers. That
means developing solutions that can aggregate
and translate diverse forms of data from a
multiplicity of connected devices into valuable
and actionable insights. Insurers that can do
that will be able to identify the best uses for the
information they collect, and increase the speed
at which they can develop relevant new products
that will differentiate them in the market.
To accomplish this, it is essential that insurance
firms develop or license an IoT platform that will
serve as the hub and consolidator of all data
received from the connected devices. This will
allow for the advanced analytics that will
provide insights that can be used to shape the
future direction of product offerings and the
company itself. There are already several players
on the market, Accenture and IBM amongst
them, that have IoT platforms that can be
leveraged right away.
8
Over the long-term
The IoT can change the fundamental nature of
insurance. While it clearly represents significant
opportunities to improve product offerings and
to reduce payouts (for example, by reducing
hospital visits), it also presents the industry with
potentially serious disruption. For instance, if the
risk management services carriers provide prove
effective, customers may decide to withdraw
from the traditional insurance market and self-
insure or “crowdsource” their coverage with each
other. The connected driverless car is likely to
lead to fewer accidents and fewer consumers
needing auto insurance, and also open the door
to collective car ownership.
The IoT could also change the way customers
perceive insurers, as their role will change
from being reactive accident compensators to
becoming proactive protection providers. Since
customer data will be much richer and more
personalized, customers will expect to be treated
as individuals. The frequency of interaction will
be much higher. Rigid, siloed product portfolios
will give way to “liquid” services that adapt
continuously to meet customers’ changing needs.
To cope with these changes, insurers will need to
adapt organizationally to become more lean and
nimble. They will need to create new operating
models and workforce structures to leverage the
dynamic new business models that will arise.
Just as importantly, they will need to change
their corporate cultures and their workforces.
The customer experience will become even more
critical than it is today, given that it will occur
much more frequently, will be more diverse
(ranging across the spectrum of risk protection)
and will be more personalized. This will demand
not only a larger service team but one that
is equipped with better interpersonal skills.
The reliance on data and analytics will grow
throughout the organization and at every level.
And as mentioned earlier, artificial intelligence
will be an indispensable co-worker that will
enable professionals to operate effectively in the
dynamic new environment.
The IoT will also force the organization to adapt
from a standalone entity to one that can function
optimally within an ecosystem of partners. Just
one aspect of this is its willingness to share
not only its customer data but its customers
themselves. This has always been a strategic
issue for FS companies, and is likely to cause
internal disruption. But if the new ecosystems are
to function effectively and generate real value,
the companies – and their people – will have
to embrace this new openness. In addition, new
skills such as partner management will become
critical to success.
Finally, it will be important to foster a culture
of innovation. It will need to be infused across
the whole organization, from idea generation
to workforce training and onboarding. And it
will require a governance structure that creates
and develops innovations with a fast and
experimental approach. The IoT is likely to evolve
at a rapid pace, with new opportunities emerging
daily – to take advantage, FS firms need to be
agile and innovative to their core.
The IoT is likely to evolve
at a rapid pace, with new
opportunities emerging
daily – to take advantage,
FS firms need to be agile
and innovative to their core.
9
Bitcoin, currently one of the best-known uses of Blockchain technology, has
garnered a significant amount of attention owing to its ability to act as a
transfer of value among unknown counterparties and to create trust in an
otherwise trustless world. This trust depends on an algorithm rather than
central, third-party verification. But Blockchain technology has use cases
that go far beyond cryptocurrencies. It has the potential to fundamentally
re-architect much of the FS functionality over the next decade.
Blockchain technology leverages cryptography and a distributed messaging
protocol to create a distributed, or shared, ledger between transaction
counterparties⁹. This means that within minutes of a transaction taking
place, or even in real-time, its details are safely stored across multiple
nodes (computers/ servers) of a network. This makes it impossible for the
sender or receiver to “corrupt” their entries.
The information is encrypted, guaranteeing a secure transfer. Ultimately, we
believe Blockchain will be leveraged to optimize the current ecosystem. It
will facilitate faster, safer and more transparent transactions for customers
(increasing their trust in FS providers), significantly reduce costs, reduce
balance sheet risk, and improve audit and compliance functions.
In capital markets, Blockchain technology has the potential to radically
transform the industry landscape. While it’s still some years away from
widespread adoption, it offers the potential to revolutionize the way assets
move and counterparties share information through financial markets.
And its implications for a wide range of current market intermediaries
will require them to redefine their business models in order to capture the
opportunities that Blockchain technology provides as well as to remain
relevant and competitive.
The arrival of Blockchain
It will facilitate faster, safer and more
transparent transactions for customers (increasing
their trust in FS providers), significantly reduce
costs, reduce balance sheet risk, and improve
audit and compliance functions.
10
11
Over the short-term
To avoid falling behind, FS firms need to begin
investigating how the technology can be best
leveraged within their organization, hiring the
right talent that can enable its implementation
and starting to conduct small-scale proofs of
concept. By performing these steps, a company
will build an understanding of the technology and
the value it brings to them.
One way to build these competencies is
to establish partnerships with the broader
ecosystem and share experiences and knowledge.
For instance, more than 55 firms across finance,
banking and technology, including Accenture,
JP Morgan, ABN AMRO and DTCC, have joined
the Hyperledger Project10
, a collaborative effort
created to advance Blockchain technology
by addressing important features for a cross-
industry open standard for distributed ledgers.
As the figure below shows, multiple start-ups
are also addressing a wide variety of Blockchain
applications.
Other FS providers are also beginning to realize
the potential power of distributed ledger
technology, including the following examples:
• Citibank¹¹ has deployed the technology
experimentally in three separate systems within
the bank, including its development of an
equivalent to Bitcoin which it calls Citicoin.
• Blockchain could also have a role outside
of capital markets. Lloyd’s¹² believes there is
potential to improve risk-recording in insurance
through better transparency, accuracy and
speed. Potential use cases include storage and
sharing of documents, as well as management
of identities and personal information.
Figure 1. Blockchain applications in the financial services sector.
Source: William Mougayar, author, The Business Blockchain, (Wiley, 2016).
Over the mid-term
As companies across the financial world
are gaining a better understanding of what
Blockchain is, they are realizing the potential
that it brings, especially within payments.
For instance, a study by Santander¹³ reports
that Blockchain has the potential to eliminate
infrastructure costs for cross-border payments,
security trading and regulatory compliance, with
these savings amounting to $15-20 billion a year.
Santander has also announced that it has more
than 20 use cases for Blockchain technology in
financial services¹⁴. In addition to reducing the
infrastructure costs, it’s important to keep in
mind that settlement times will also be reduced
dramatically. To start reaping these benefits,
companies should begin planning for internal
proofs of concept to build the competencies
required to bring it to scale.
Over the long-term
As the technology matures, Blockchain’s
applications will extend far beyond payments,
and cover many other purposes that today require
sensitive information to be held centrally. Its
implications for financial services are therefore
huge, with the potential to remove the necessity
for a wide range of market intermediaries, as
highlighted in the list below:
Secure ledger for transactions
Shared by all parties in an established,
distributed network, the ledger facilitates
secure transactions.
Smart contracts
Computerized processes can execute, verify
and enforce negotiations or contracts, thus
eliminating the need for many contract clauses.
Reduced costs
Automated smart contracts will cut the costs
associated with current contracting practices
and reduce infrastructure costs.
Elimination of error handling
Real-time tracking and a clear audit trail for
any transaction eliminates the need for error
handling or reconciliation between records.
Automation
Execution and settlement of transactions
occur automatically with transparency over
the internet, without any need for human
involvement and under the control of an
incorruptible set of business rules.
Redefining the role of “trusted” third parties
In a world where assets are held in the cloud
and tied to their owner’s identity, the role
of trusted third parties will be revised. In
some instances, virtual markets may be self-
governing and therefore able to circumvent the
need for intermediaries.
Another interesting application of blockchain
across industries is its use as an asset registry.
We foresee a world where most asset ownership
is clearly and transparently documented on
Blockchain technology, thus significantly reducing
the risk of fraud in this area.
12
13
Gearing up for change in a skills vacuum
Blockchain is likely to disrupt business models
across the industry. One of the first challenges
facing FS firms is evaluating the potential
impact, developing a Blockchain strategy, and
understanding the organizational changes
required to effectively embed the technology.
Many are asking themselves: what do our
managers need to know to make decisions
about Blockchain? Where, other than from the
implementers, do we gain this knowledge? And
how will we know when we are “good to go”?
Blockchain and its associated infrastructure will
be developed, leveraged, supported and run by
people. The ability to recruit, train and support
the right people is therefore critical. It is no
surprise that there is a dearth of professionals
whose skills bridge the worlds of Blockchain
and financial services – and a plethora of
organizations competing for these skills. Creative
solutions will be needed for employers to
understand exactly what skills they require, and
to go about securing and retaining them.
The impact of Blockchain will be felt further
afield than just payments, and professionals in
other areas must also be up-skilled. The legal,
regulatory, risk and capital implications should
be clearly understood. Careful thought should
be given to where accountability will reside. The
effect on profitability is another key issue – for
example, will the workforce shrink or grow in the
short term, and how much should be budgeted
for training?
Blockchain has given rise to great excitement
throughout the FS sector. But of course, with
great excitement comes great uncertainty.
To capitalize on the growth potential of these
technologies they need to be embraced in the
right way. Alongside the technologies themselves,
workforces and organizations will need to evolve
to innovate and succeed in the new dynamic.
The following steps will provide an initial
understanding of the technologies relevant to the
organization, and help identify ways of leveraging
them for a competitive advantage:
1. Sense
Build an organization-wide understanding of the
internal and external processes that can leverage
the new technologies. This includes:
• Mapping the start-up ecosystem and forming
partnerships, by participating in fintech
boards, to understand the latest developments.
Which innovators are addressing real
industry challenges and which are producing
solutions looking for a problem? Leaders
and technologists alike need pragmatism
to understand the limitations of the
new technologies and the challenges of
implementing and using them.
• Working with “front-line” employees, at all
levels, to identify opportunities for using the
new technologies effectively. Their practical
knowledge and experience can be a great asset,
one which they are usually eager to share –
so don’t waste it.
Moving ahead in uncertainty
• Creating an environment which embraces
change, such that employees across the
enterprise, from front to back office, are
motivated to identify processes, products and
services that remain costly, latent, and ripe for
change. Key aspects of this new environment
will be the fostering of an innovation-centered
workplace, the recognition of technology as a
competitive advantage, and a leadership willing
to explore and invest in newer technologies.
2. Interpret
The second step is to set up an internal team to
evaluate the various technologies identified in
step one, determine which are most relevant to
the organization, and predict their impact. This
can include:
• Identifying which technologies present
the biggest threats and opportunities to the
organization.
• Tracking their price-performance ratios to
identify the best time to begin adopting them.
• Identifying the areas and processes within the
organization which could benefit most from the
relevant technologies.
3. Act
The third step is to take action by beginning to
implement these technologies in those parts of
the organization where they have the greatest
potential to make a difference. This should be
done by conducting internal experiments and
quick proofs of concept to build understanding
while keeping investment low. The aim is to
determine whether they can drive the expected
benefits and can be integrated with existing
infrastructures. One of the biggest challenges will
be to proactively address the human side of the
equation. This includes understanding:
• How will the new technologies impact the IT
function? What new skill sets will be needed
to adopt, maintain and innovate them? Are
sufficient recruits available, and will it be
possible to retain them for as long as they are
required? Can consultants fill the gaps?
• How will the roles of non-IT personnel be
affected? As the new technologies change the
things that FS firms do, as well as the ways
they do them, considerable upskilling may be
needed. For example, many auditing functions
today require limited technology skills – in a
Blockchain environment that will change.
• How will these changes affect interactions
with external stakeholders, such as regulators
and ecosystem partners?
• What will the impact be on resourcing as a
whole, in the short, medium and long terms?
Proofs of concept in the parts of the business
most likely to be affected will shed light on
this critical issue.
• As with all innovation, implementation will
require a skilled team that is supported by
leadership who understand the value, costs and
risks associated with the technology. The entire
project will need to be underpinned by an
organization that is comfortable to receive it.
14
15
Artificial intelligence, the Internet of Things and
Blockchain have the potential to impose profound
and far-reaching change on the financial
services industry. But even as we focus on these
transformative technologies, and their likely
impact, it is critical to remember that FS remains
a service industry and that people will continue
to be the most important element for success.
There is no doubt that some jobs will be lost;
others will change significantly, and extensive
retraining may be required. New jobs will be
created across the organization, creating a stern
challenge for recruiters – they will be competing
in a fiercely contested talent marketplace.
Managing all this change, and creating a new
corporate culture that relishes constant novelty
and opportunity, will be essential to success.
What FS firms are facing today is not that
different from the industrial revolution. Obsolete
jobs were lost, but many new roles were
created. These took advantage of cutting-edge
technology that, for most industries, enabled a
new era of productivity and prosperity – with
unprecedented benefits for society as a whole.
And today, as before, while it is important to have
a technological edge, the leading companies of
the future will be those that have the best people
empowered by technology.
Technological change will
depend on people
Artificial intelligence, the Internet
of Things and Blockchain have
the potential to impose profound
and far-reaching change on the
financial services industry.
Footnotes
1. 	 Human Longevity, Inc. and Discovery Ltd to Offer Whole 	
	 Exome, Whole Genome and Cancer Genome Sequencing 	
	 to Discovery Insurance Clients in South Africa and the 	
	 United Kingdom, Human Longevity press release, 		
	 September 22, 2015
2. 	 Helping the UK to become a world leader in
	 driverless technology, AXA UK website
3. 	 Verisk Insurance Solutions Announces GM as Inaugural 	
	 Auto Manufacturer to Join Telematics Data Exchange, 		
	 Verisk press release, September 2, 2015
4. 	 Coinify and iPayDNA bring blockchain payments to
	 the Asia Pacific merchants, Coinify press release,
	 March 23, 2016
5. 	 “Crowdfunding” muscles in on the bond market,
	 Financial Times, June 24, 2014
6. 	 SBDA Group, turning banking data into
	 targeted marketing, CBRonline.com news, April 6, 2016
7. 	 Distribution & Agency Management Survey,
	 Accenture 2015
8.	 Consumer Driven Innovation Survey, Accenture 2014
9.	 Blockchain in the Investment Bank, Accenture 2015
10.	Hyperledger Project Maintains Strong Momentum with 	
	 New Members, Hyperledger.org, June 22, 2016
11.	 Codename Citicoin: Banking Giant Built Three Internal 	
	 Blockchains to Test Bitcoin Technology, International 		
	 Business Times, July 1, 2015
12.	Insurance and FinTech – the Technology Revolution,
	 Lloyd’s website, Technology Operating Model, The 		
	 Technology Revolution
13.	The Fintech 2.0 Paper: Rebooting Financial Services, 		
	 Santander InnoVentures, Oliver Wyman and Anthemis 		
	 Group, 2015
14.	Santander is Experimenting with Bitcoin and Close to 		
	 Investing in a Blockchain Startup, Business Insider,
	 June 17, 2015
Contact the Authors
To learn more about the disruptive technologies
discussed in this report, please contact the authors:
Bent Dalager
Head of Robotics and AI for Financial Services,
Europe, Africa and Latin America. Based in Denmark.
bent.dalager@accenture.com
Michael B. Jensen
Responsible for FutureTech in Financial Services,
Nordic. Based in Denmark.
michael.b.jensen@accenture.com
Contributors
Simren Dhaliwal, Thomas Christensen
Thanks to
Jannik Henriks, Sigrid Sømod
Join the conversation
Read our blog
About Accenture
Accenture is a leading global professional
services company, providing a broad range of
services and solutions in strategy, consulting,
digital, technology and operations. Combining
unmatched experience and specialized skills
across more than 40 industries and all business
functions – underpinned by the world’s largest
delivery network – Accenture works at the
intersection of business and technology to help
clients improve their performance and create
sustainable value for their stakeholders. With
approximately 373,000 people serving clients
in more than 120 countries, Accenture drives
innovation to improve the way the world works
and lives. Visit us at www.accenture.com.
Copyright © 2016 Accenture. All rights reserved. Accenture,
its logo, and High Performance Delivered are trademarks
of Accenture. This document is produced by consultants at
Accenture as general guidance. It is not intended to provide
specific advice on your circumstances. If you require advice
or further details on any matters referred to, please contact
your Accenture representative.

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Three technologies changing the insurance game

  • 1. Three technologies that are changing the financial services game And how the workforce must adapt to take advantage of these innovations
  • 2. 2 How visionaries are exploiting digital technology to reshape the future of financial services Leading financial services firms are actively looking for new technologies to achieve efficiency and speed, and offer new services to customers. Today, in an era where we are seeing exponential growth in information technology, visionary companies can leverage digitization and new technologies to reshape and transform the industry in new directions. In a digital world, companies can gain scale and capture market share faster than ever before. Technology is breaking down industry borders as technology giants, established firms, and innovative start- ups are all entering the FS world offering novel collaborations and new services. Human Longevity Inc., for example, is partnering with Discovery Vitality to offer DNA sequencing for the insurer’s customers to better understand their health risks¹. AXA in the UK is working with a technology consortium that is piloting driverless cars². Verisk Analytics is partnering with General Motors to enable car owners to share their telematics driving data with their insurer of choice³. Across the Nordics and Western Europe we see start-ups like Coinify (a digital currency platform⁴), CrowdCube (crowdsourced equity investing⁵) and SBDA Group (a machine-learning behavior-prediction platform⁶) challenging incumbents in the finance sector with a new take on solutions. Many of the digital services and solutions that are emerging in financial services are underpinned by game-changing technologies with the potential to disrupt traditional offering portfolios, the way firms operate, and even the industry sectors themselves. The workforce – the skills required, the way work is performed and managed, and the way workers are supported by technology – will not be spared the disruption. This report highlights three emerging technologies that will play a fundamental role in shaping the industry right now, over the next few years and over the next decade: robotics and artificial intelligence (AI), the Internet of Things (IoT) and Blockchain.
  • 3. Already, robotics software applications are transforming the accuracy and speed of previously cumbersome manual tasks. AI is changing the nature of customer interactions in financial services; some customer service departments are almost fully virtualized. In addition to speed and precision, firms are benefiting from lower costs. Furthermore, and perhaps more importantly, these AI systems can enable organizations to adapt, scale and respond to ever faster change and innovation in the digital era. The exponential rise of the IoT (which refers to all the devices and sensors connected to the web) is also set to revolutionize many aspects of the world we live and work in. This proliferation of connected devices opens up almost endless possibilities for new business models and applications that are driven by optimizing the use of resources, improving processes and helping transform decision-making capabilities. New streams of revenue for insurance companies will arise as our lives become more and more connected and immersed in digital, which in turn will influence our habits. The industry is certainly set to be transformed, as firms will suddenly be able to offer personalized insurance policies – together with a broader set of tailored services – that we have never seen before. Blockchain, though still in its infancy and several years away from widespread adoption, will drive tremendous change in the financial sector in the coming years. By producing faster and more secure transactions through distributed ledgers, it will transform the world of capital markets. Settlements will take minutes, reconciliation will be a remnant of the past and middlemen will no longer be needed. However, its potential extends far beyond currency transactions and could include asset registries, data security and equity management. It could even play a role in the political process as a secure, incorruptible voting platform. As the impact of these technologies on the financial services sector grows exponentially, it is of paramount importance that organizations and their leaders are aware of them and develop an understanding of how to use them to drive growth, reduce cost and increase competitiveness in a digital age. In particular, it is essential that they understand the workforce changes that will be needed to capitalize on these innovations and to position their organization for future success. This report offers a brief introduction to the three technologies and their relevance to the industry. It also provides guiding steps that can serve as a launchpad for initiatives that leverage them to create the winning companies of tomorrow. 3
  • 4. One of most talked about technological developments over the past few years is the rapid advancement of artificial intelligence. Accenture defines AI as systems and processes that gather and perceive input or information from their environment, understand what it means and act accordingly. Advanced systems also have the ability to learn by themselves. AI is already making an impact in business and capturing the attention of companies everywhere. For instance, numerous leading technology firms, including Apple, Tesla, Facebook and Google are already investing heavily in AI systems. However, its use extends beyond these technological leaders. AI is starting to play a role in driving real value for a broader range of firms, including those in financial services. AI covers not just one, but a spectrum of technologies that work together. These include facial, speech, and gesture recognition systems, as well as language processing, robotics, and machine learning. In essence, these combined technologies comprise a system that has the ability to perceive and collect data, analyze it, and use that analysis to support independent, informed decisions. This makes firms smarter and leaner, and enables them to react and adapt faster in the face of constant and pervasive change. Artificial intelligence is changing the entire financial industry This makes firms smarter and leaner, and enables them to react and adapt faster in the face of constant and pervasive change. 4
  • 5. Over the short-term FS companies worldwide are starting to deploy AI to reduce costs and improve services. For example, multiple banks and insurers are using robotic process automation (RPA) software to improve their operational efficiency. The software interacts with systems across the organization following rules-based business processes, just as humans do in existing IT landscapes. The automated processes span the life & pensions and banking industries, from mortgage lending to data consolidation and data validation. RPA’s ability to execute these tasks much faster and more consistently and securely than time- consuming manual processes enables firms to improve quality while reducing cost. What’s more: the software can scale quickly. This means organizations can respond faster to the ever shorter innovation and change cycles of the digital era. For example, a global bank is using AI to automate its handling of unmatched invoices. When performed manually this task spans several ERP systems, requires multiple validations and extensive training – factors that contributed to a set of processes that sometimes took hours to complete. With automation in place, the process is 46 percent more efficient, handling per transaction has dropped by 40 percent and, most impressively, the accuracy rate is 100 percent. Over the mid-term Beyond basic RPA, AI will also enable the automation of more complex tasks as natural language processing and deep-learning technologies improve. These developments will allow systems, trained with large datasets of information, to accurately read text (both structured and unstructured) and identify objects in pictures that can then be used as input to solve inquiries or support human decision making. This has already started to take place in the insurance industry, where one carrier now uses a natural language processor to “read” and determine payouts for patient treatment. Rather than an employee having to read through voluminous records and then calculate the correct reimbursement fee for each patient, the system scans each record, understands the text, analyzes the content and calculates the correct payment. The process for each form has shrunk from 25 minutes to three minutes – which includes a 15 second human review to validate the results of the algorithm. Over the long(er)-term Within the next decade, AI will also change the fundamental nature of customer interactions in financial services, making some customer service departments almost fully virtualized. These systems will leverage several technologies including natural language processing, sentiment analyzers, machine learning and analytics to be able to have advanced conversations (either by chat or speech) with humans and answer highly complex inquiries. And perhaps most importantly, they have the ability to learn from their own interactions or by observing a human perform a specific task. For instance, IPSoft’s virtual agent, Amelia, is a language processing system that can learn by reading and listening in more than 20 languages, and can even detect the emotional state of the customer through the use of sentiment analysis. Amelia can address even complex inquiries and cases covering a broad range of issues, and is able to leverage machine learning to improve from each one of its own interactions. If it is unable to address an inquiry it will escalate the discussion to a human counterpart, and then observe the following conversation so that it can learn how to solve the case the next time it arises. In one case, a company using Amelia was able to reduce the size of its call center team by 60 percent. 5
  • 6. The imperative of adaptability As we have touched upon earlier and feel it’s imperative to reiterate, the real value of AI systems is likely to lie more in their enabling FS firms to adapt and respond to ever faster change and innovation in the digital era, than the significant cost and accuracy improvements they bring. AI systems can be easily reassigned to new tasks or upgraded to provide new services. This will allow companies to quickly shift or pivot to new circumstances without the need to expend significant resources and time on intensive retraining and reorganization efforts that make change so difficult today. The imperative of adaptability becomes even more evident when we look at how AI developments across industry lines will permanently impact the FS sector and force adaptations to business models. For example, how will the automotive insurance world react to the rise of self-driving vehicles, where the number of accidents will be few and the car ownership model could be radically different from today (collective instead of personal ownership)? Machines – the essential new co-workers of the digital age The rapidly expanding reach of digital technology, and the huge volume of data that is being made available, are opening up unprecedented opportunities for FS firms. But they are opportunities which people, on their own, are unable to get to grips with. Working in tandem with intelligent machines, however, the scope of what the FS workforce can achieve becomes almost limitless. To realize this vision, leaders need to create corporate cultures in which technology empowers their people to evolve, adapt and drive change. Far from being a dehumanized vision, it is one in which workers are relieved of the most repetitive and onerous tasks. This may result in some jobs being lost. But it will also create numerous new jobs, in areas ranging from predictive analytics to programming, monitoring, and system maintenance. Machines will take over the heavy lifting, cutting through complexity to trigger appropriate actions and aid decision making. Robotic process automation software will automate numerous time-consuming and labor-intensive administrative tasks across both the front and back offices. Following rules-based logic, software will sift through multiple applications/ systems across the enterprise and generate responses to inquiries. For customer service, that might mean enabling an employee to retrieve relevant information from several databases and consolidate the data into a single location. Similarly, robotics software can track and monitor customer interactions, sending polite, timely reminders to customers who have not responded to communications and requests. People formerly responsible for these routine tasks will be moved to roles that require more nuanced skills and judgment – such as sales, customer care, high-priority claims assessment and management. Customer retention, cross- selling and fraud detection are just a few of the areas that will benefit enormously from the collaboration of machines and people – and that offer the potential for up-skilled workers to perform more meaningful roles. AI will undoubtedly transform the FS workplace, and will impose the need to change jobs, recruit new talent and retrain incumbents. But by reinventing what is possible, it will deliver unimaginable rewards. 6
  • 7. The availability of huge quantities of real- time data from embedded sensors, along with advanced analytics, is enabling businesses in the financial world to transform their business models and offer new products. The insurance industry, in particular, is likely to be impacted significantly in the next few years by the Internet of Things. The IoT will bring the customer experience to the forefront, open the door to an entirely new class of risk management services, and also reduce payouts for insurance companies. In fact, a recent Accenture survey found that 45 percent of insurers cited connected devices as a driver of revenue within the next three years⁷. Over the short-term The IoT already comprises billions of connected devices across the world, meaning insurers could have access – in real time – to many behavioral factors that can shape and determine pricing and coverage. It will also change the services they offer to customers. Take life & health insurance, for example. Today, premiums are largely calculated according to aggregates and averages based on individual circumstances and family history. But, crucially, none of these calculations are, in any real sense, personalized. However, wearable connected technology is radically changing the market. Because it can constantly record and share consumers’ health-related habits with insurance providers, whether it be exercise, quality of sleep, diet and other lifestyle factors, the IoT will enable insurers to offer highly personalized discounts and other incentives for customers who pursue healthier lifestyle choices. 7 The IoT creates opportunities for customized products in the insurance industry The availability of huge quantities of real-time data from embedded sensors, along with advanced analytics, is enabling businesses in the financial world to transform their business models and offer new products.
  • 8. This could even extend, as Accenture envisions, to insurers providing customers with wearable devices that would enable the insurers to provide truly personalized plans based on real-time information, and to encourage behavior likely to reduce long-term medical expenses. This is in fact already happening – Generali and John Hancock, among others, have partnered with the South African insurer Discovery to incorporate a reward-based program for healthy behaviors. In such cases, the insurer actually becomes a key partner in preventing accidents and negative outcomes for customers, instead of just being the back-up plan in the event of an undesired outcome. We are already seeing the same trend in other areas of the insurance world, such the auto and home insurance sectors. A growing number of carriers provide their customers with telematics devices to record their driving patterns. Some offer real-time and/or retrospective coaching, and reward less risky drivers with lower premiums or other benefits. State Farm harnesses both the IoT and artificial intelligence; it has partnered with home-monitoring start-up Canary to provide customers with intelligent home-monitoring solutions in exchange for lower insurance rates. And while privacy concerns are often raised in this context, research shows that customers are overwhelmingly willing to share their information if they perceive value from doing so. A recent study found that 78 percent of insurance customers are willing to provide relevant behavioral data in return for a personalized offering⁸. However, it is critical that insurers remember that handling such personal data in a responsible way will be critical to retaining customer trust in a digital world. It could even be a potential differentiator in the marketplace. Over the mid-term As insurers around the world begin to engage their customers through the IoT and create personalized offerings, it is critical that they also identify ways to manage, store and analyze all the connected data so that they can use it most efficiently to create better offerings and services. However, the true value of the IoT resides in the ability to collect and analyze data in ways that enable a business to offer innovative, differentiated services to its customers. That means developing solutions that can aggregate and translate diverse forms of data from a multiplicity of connected devices into valuable and actionable insights. Insurers that can do that will be able to identify the best uses for the information they collect, and increase the speed at which they can develop relevant new products that will differentiate them in the market. To accomplish this, it is essential that insurance firms develop or license an IoT platform that will serve as the hub and consolidator of all data received from the connected devices. This will allow for the advanced analytics that will provide insights that can be used to shape the future direction of product offerings and the company itself. There are already several players on the market, Accenture and IBM amongst them, that have IoT platforms that can be leveraged right away. 8
  • 9. Over the long-term The IoT can change the fundamental nature of insurance. While it clearly represents significant opportunities to improve product offerings and to reduce payouts (for example, by reducing hospital visits), it also presents the industry with potentially serious disruption. For instance, if the risk management services carriers provide prove effective, customers may decide to withdraw from the traditional insurance market and self- insure or “crowdsource” their coverage with each other. The connected driverless car is likely to lead to fewer accidents and fewer consumers needing auto insurance, and also open the door to collective car ownership. The IoT could also change the way customers perceive insurers, as their role will change from being reactive accident compensators to becoming proactive protection providers. Since customer data will be much richer and more personalized, customers will expect to be treated as individuals. The frequency of interaction will be much higher. Rigid, siloed product portfolios will give way to “liquid” services that adapt continuously to meet customers’ changing needs. To cope with these changes, insurers will need to adapt organizationally to become more lean and nimble. They will need to create new operating models and workforce structures to leverage the dynamic new business models that will arise. Just as importantly, they will need to change their corporate cultures and their workforces. The customer experience will become even more critical than it is today, given that it will occur much more frequently, will be more diverse (ranging across the spectrum of risk protection) and will be more personalized. This will demand not only a larger service team but one that is equipped with better interpersonal skills. The reliance on data and analytics will grow throughout the organization and at every level. And as mentioned earlier, artificial intelligence will be an indispensable co-worker that will enable professionals to operate effectively in the dynamic new environment. The IoT will also force the organization to adapt from a standalone entity to one that can function optimally within an ecosystem of partners. Just one aspect of this is its willingness to share not only its customer data but its customers themselves. This has always been a strategic issue for FS companies, and is likely to cause internal disruption. But if the new ecosystems are to function effectively and generate real value, the companies – and their people – will have to embrace this new openness. In addition, new skills such as partner management will become critical to success. Finally, it will be important to foster a culture of innovation. It will need to be infused across the whole organization, from idea generation to workforce training and onboarding. And it will require a governance structure that creates and develops innovations with a fast and experimental approach. The IoT is likely to evolve at a rapid pace, with new opportunities emerging daily – to take advantage, FS firms need to be agile and innovative to their core. The IoT is likely to evolve at a rapid pace, with new opportunities emerging daily – to take advantage, FS firms need to be agile and innovative to their core. 9
  • 10. Bitcoin, currently one of the best-known uses of Blockchain technology, has garnered a significant amount of attention owing to its ability to act as a transfer of value among unknown counterparties and to create trust in an otherwise trustless world. This trust depends on an algorithm rather than central, third-party verification. But Blockchain technology has use cases that go far beyond cryptocurrencies. It has the potential to fundamentally re-architect much of the FS functionality over the next decade. Blockchain technology leverages cryptography and a distributed messaging protocol to create a distributed, or shared, ledger between transaction counterparties⁹. This means that within minutes of a transaction taking place, or even in real-time, its details are safely stored across multiple nodes (computers/ servers) of a network. This makes it impossible for the sender or receiver to “corrupt” their entries. The information is encrypted, guaranteeing a secure transfer. Ultimately, we believe Blockchain will be leveraged to optimize the current ecosystem. It will facilitate faster, safer and more transparent transactions for customers (increasing their trust in FS providers), significantly reduce costs, reduce balance sheet risk, and improve audit and compliance functions. In capital markets, Blockchain technology has the potential to radically transform the industry landscape. While it’s still some years away from widespread adoption, it offers the potential to revolutionize the way assets move and counterparties share information through financial markets. And its implications for a wide range of current market intermediaries will require them to redefine their business models in order to capture the opportunities that Blockchain technology provides as well as to remain relevant and competitive. The arrival of Blockchain It will facilitate faster, safer and more transparent transactions for customers (increasing their trust in FS providers), significantly reduce costs, reduce balance sheet risk, and improve audit and compliance functions. 10
  • 11. 11 Over the short-term To avoid falling behind, FS firms need to begin investigating how the technology can be best leveraged within their organization, hiring the right talent that can enable its implementation and starting to conduct small-scale proofs of concept. By performing these steps, a company will build an understanding of the technology and the value it brings to them. One way to build these competencies is to establish partnerships with the broader ecosystem and share experiences and knowledge. For instance, more than 55 firms across finance, banking and technology, including Accenture, JP Morgan, ABN AMRO and DTCC, have joined the Hyperledger Project10 , a collaborative effort created to advance Blockchain technology by addressing important features for a cross- industry open standard for distributed ledgers. As the figure below shows, multiple start-ups are also addressing a wide variety of Blockchain applications. Other FS providers are also beginning to realize the potential power of distributed ledger technology, including the following examples: • Citibank¹¹ has deployed the technology experimentally in three separate systems within the bank, including its development of an equivalent to Bitcoin which it calls Citicoin. • Blockchain could also have a role outside of capital markets. Lloyd’s¹² believes there is potential to improve risk-recording in insurance through better transparency, accuracy and speed. Potential use cases include storage and sharing of documents, as well as management of identities and personal information. Figure 1. Blockchain applications in the financial services sector. Source: William Mougayar, author, The Business Blockchain, (Wiley, 2016).
  • 12. Over the mid-term As companies across the financial world are gaining a better understanding of what Blockchain is, they are realizing the potential that it brings, especially within payments. For instance, a study by Santander¹³ reports that Blockchain has the potential to eliminate infrastructure costs for cross-border payments, security trading and regulatory compliance, with these savings amounting to $15-20 billion a year. Santander has also announced that it has more than 20 use cases for Blockchain technology in financial services¹⁴. In addition to reducing the infrastructure costs, it’s important to keep in mind that settlement times will also be reduced dramatically. To start reaping these benefits, companies should begin planning for internal proofs of concept to build the competencies required to bring it to scale. Over the long-term As the technology matures, Blockchain’s applications will extend far beyond payments, and cover many other purposes that today require sensitive information to be held centrally. Its implications for financial services are therefore huge, with the potential to remove the necessity for a wide range of market intermediaries, as highlighted in the list below: Secure ledger for transactions Shared by all parties in an established, distributed network, the ledger facilitates secure transactions. Smart contracts Computerized processes can execute, verify and enforce negotiations or contracts, thus eliminating the need for many contract clauses. Reduced costs Automated smart contracts will cut the costs associated with current contracting practices and reduce infrastructure costs. Elimination of error handling Real-time tracking and a clear audit trail for any transaction eliminates the need for error handling or reconciliation between records. Automation Execution and settlement of transactions occur automatically with transparency over the internet, without any need for human involvement and under the control of an incorruptible set of business rules. Redefining the role of “trusted” third parties In a world where assets are held in the cloud and tied to their owner’s identity, the role of trusted third parties will be revised. In some instances, virtual markets may be self- governing and therefore able to circumvent the need for intermediaries. Another interesting application of blockchain across industries is its use as an asset registry. We foresee a world where most asset ownership is clearly and transparently documented on Blockchain technology, thus significantly reducing the risk of fraud in this area. 12
  • 13. 13 Gearing up for change in a skills vacuum Blockchain is likely to disrupt business models across the industry. One of the first challenges facing FS firms is evaluating the potential impact, developing a Blockchain strategy, and understanding the organizational changes required to effectively embed the technology. Many are asking themselves: what do our managers need to know to make decisions about Blockchain? Where, other than from the implementers, do we gain this knowledge? And how will we know when we are “good to go”? Blockchain and its associated infrastructure will be developed, leveraged, supported and run by people. The ability to recruit, train and support the right people is therefore critical. It is no surprise that there is a dearth of professionals whose skills bridge the worlds of Blockchain and financial services – and a plethora of organizations competing for these skills. Creative solutions will be needed for employers to understand exactly what skills they require, and to go about securing and retaining them. The impact of Blockchain will be felt further afield than just payments, and professionals in other areas must also be up-skilled. The legal, regulatory, risk and capital implications should be clearly understood. Careful thought should be given to where accountability will reside. The effect on profitability is another key issue – for example, will the workforce shrink or grow in the short term, and how much should be budgeted for training? Blockchain has given rise to great excitement throughout the FS sector. But of course, with great excitement comes great uncertainty. To capitalize on the growth potential of these technologies they need to be embraced in the right way. Alongside the technologies themselves, workforces and organizations will need to evolve to innovate and succeed in the new dynamic. The following steps will provide an initial understanding of the technologies relevant to the organization, and help identify ways of leveraging them for a competitive advantage: 1. Sense Build an organization-wide understanding of the internal and external processes that can leverage the new technologies. This includes: • Mapping the start-up ecosystem and forming partnerships, by participating in fintech boards, to understand the latest developments. Which innovators are addressing real industry challenges and which are producing solutions looking for a problem? Leaders and technologists alike need pragmatism to understand the limitations of the new technologies and the challenges of implementing and using them. • Working with “front-line” employees, at all levels, to identify opportunities for using the new technologies effectively. Their practical knowledge and experience can be a great asset, one which they are usually eager to share – so don’t waste it. Moving ahead in uncertainty
  • 14. • Creating an environment which embraces change, such that employees across the enterprise, from front to back office, are motivated to identify processes, products and services that remain costly, latent, and ripe for change. Key aspects of this new environment will be the fostering of an innovation-centered workplace, the recognition of technology as a competitive advantage, and a leadership willing to explore and invest in newer technologies. 2. Interpret The second step is to set up an internal team to evaluate the various technologies identified in step one, determine which are most relevant to the organization, and predict their impact. This can include: • Identifying which technologies present the biggest threats and opportunities to the organization. • Tracking their price-performance ratios to identify the best time to begin adopting them. • Identifying the areas and processes within the organization which could benefit most from the relevant technologies. 3. Act The third step is to take action by beginning to implement these technologies in those parts of the organization where they have the greatest potential to make a difference. This should be done by conducting internal experiments and quick proofs of concept to build understanding while keeping investment low. The aim is to determine whether they can drive the expected benefits and can be integrated with existing infrastructures. One of the biggest challenges will be to proactively address the human side of the equation. This includes understanding: • How will the new technologies impact the IT function? What new skill sets will be needed to adopt, maintain and innovate them? Are sufficient recruits available, and will it be possible to retain them for as long as they are required? Can consultants fill the gaps? • How will the roles of non-IT personnel be affected? As the new technologies change the things that FS firms do, as well as the ways they do them, considerable upskilling may be needed. For example, many auditing functions today require limited technology skills – in a Blockchain environment that will change. • How will these changes affect interactions with external stakeholders, such as regulators and ecosystem partners? • What will the impact be on resourcing as a whole, in the short, medium and long terms? Proofs of concept in the parts of the business most likely to be affected will shed light on this critical issue. • As with all innovation, implementation will require a skilled team that is supported by leadership who understand the value, costs and risks associated with the technology. The entire project will need to be underpinned by an organization that is comfortable to receive it. 14
  • 15. 15 Artificial intelligence, the Internet of Things and Blockchain have the potential to impose profound and far-reaching change on the financial services industry. But even as we focus on these transformative technologies, and their likely impact, it is critical to remember that FS remains a service industry and that people will continue to be the most important element for success. There is no doubt that some jobs will be lost; others will change significantly, and extensive retraining may be required. New jobs will be created across the organization, creating a stern challenge for recruiters – they will be competing in a fiercely contested talent marketplace. Managing all this change, and creating a new corporate culture that relishes constant novelty and opportunity, will be essential to success. What FS firms are facing today is not that different from the industrial revolution. Obsolete jobs were lost, but many new roles were created. These took advantage of cutting-edge technology that, for most industries, enabled a new era of productivity and prosperity – with unprecedented benefits for society as a whole. And today, as before, while it is important to have a technological edge, the leading companies of the future will be those that have the best people empowered by technology. Technological change will depend on people Artificial intelligence, the Internet of Things and Blockchain have the potential to impose profound and far-reaching change on the financial services industry.
  • 16. Footnotes 1. Human Longevity, Inc. and Discovery Ltd to Offer Whole Exome, Whole Genome and Cancer Genome Sequencing to Discovery Insurance Clients in South Africa and the United Kingdom, Human Longevity press release, September 22, 2015 2. Helping the UK to become a world leader in driverless technology, AXA UK website 3. Verisk Insurance Solutions Announces GM as Inaugural Auto Manufacturer to Join Telematics Data Exchange, Verisk press release, September 2, 2015 4. Coinify and iPayDNA bring blockchain payments to the Asia Pacific merchants, Coinify press release, March 23, 2016 5. “Crowdfunding” muscles in on the bond market, Financial Times, June 24, 2014 6. SBDA Group, turning banking data into targeted marketing, CBRonline.com news, April 6, 2016 7. Distribution & Agency Management Survey, Accenture 2015 8. Consumer Driven Innovation Survey, Accenture 2014 9. Blockchain in the Investment Bank, Accenture 2015 10. Hyperledger Project Maintains Strong Momentum with New Members, Hyperledger.org, June 22, 2016 11. Codename Citicoin: Banking Giant Built Three Internal Blockchains to Test Bitcoin Technology, International Business Times, July 1, 2015 12. Insurance and FinTech – the Technology Revolution, Lloyd’s website, Technology Operating Model, The Technology Revolution 13. The Fintech 2.0 Paper: Rebooting Financial Services, Santander InnoVentures, Oliver Wyman and Anthemis Group, 2015 14. Santander is Experimenting with Bitcoin and Close to Investing in a Blockchain Startup, Business Insider, June 17, 2015 Contact the Authors To learn more about the disruptive technologies discussed in this report, please contact the authors: Bent Dalager Head of Robotics and AI for Financial Services, Europe, Africa and Latin America. Based in Denmark. bent.dalager@accenture.com Michael B. Jensen Responsible for FutureTech in Financial Services, Nordic. Based in Denmark. michael.b.jensen@accenture.com Contributors Simren Dhaliwal, Thomas Christensen Thanks to Jannik Henriks, Sigrid Sømod Join the conversation Read our blog About Accenture Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 373,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com. Copyright © 2016 Accenture. All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative.