In the ever-evolving landscape of the financial services industry, staying competitive is not just about offering innovative products and services but also about delivering them efficiently and effectively. In recent years, it has become increasingly evident that the role of a product owner holds the key to unlocking untapped potential within banks and insurance companies. However, despite the profound implications for customer value and organizational growth, many FSI institutions have overlooked the transformative power of product owner enablement.
At a time when financial institutions are racing to meet the demands of a digital-first world, the absence of strategic investments in product owner training and uplift is akin to missing the forest for the trees. The opportunity cost of not prioritizing product owner enablement is staggering, with millions of dollars’ worth of hidden value left untapped.
The Landscape: Understanding the role of Product Owner
Every FSI institution has adopted agile ways of working in some share or form. Every FSI institution is in their transformation journey at different stage from “getting started” to “getting mature” and some abandoning it for various reasons.
The financial services industry (FSI) has been undergoing a profound transformation in recent years, driven by a combination of technological advancements, regulatory changes, evolving customer expectations, and market dynamics. Here’s an overview of the FSI transformation landscape with some key facts:
1. Digital Disruption:
- Fact: The adoption of digital technologies has been accelerating across the FSI. In 2020, McKinsey reported that digital customer interactions had increased by 20-50%, depending on the region.
- Impact: Digital transformation has reshaped how financial services are delivered, with online banking, mobile apps, robo-advisors, and digital wallets becoming commonplace. This has increased convenience and accessibility for customers.
2. FinTech Innovation:
- Fact: The FinTech sector has experienced explosive growth. In 2020, global FinTech investment reached $105 billion, despite the challenges posed by the COVID-19 pandemic.
- Impact: FinTech firms have disrupted traditional banking and insurance models by offering innovative solutions such as peer-to-peer lending, blockchain-based payments, and automated underwriting. This has spurred incumbents to adapt and innovate.
3. Regulatory Changes:
- Fact: Regulatory bodies have introduced reforms to enhance transparency, protect consumers, and foster competition. For example, the European Union’s PSD2 directive mandates open banking.
- Impact: Compliance costs have risen, but these changes have also encouraged collaboration, innovation, and the emergence of new business models.
4. Data Analytics and AI:
- Fact: FSI firms are increasingly leveraging data analytics and artificial intelligence. In 2020, the global AI in FSI market was valued at $5.66 billion and is projected to grow at a CAGR of over 25% from 2021 to 2028.
- Impact: AI-driven applications are improving risk assessment, fraud detection, customer service, and personalized financial advice, while also enabling cost savings.
5. ESG (Environmental, Social, and Governance) Integration:
- Fact: ESG considerations are gaining prominence in FSI. Sustainable investment assets exceeded $30 trillion globally in 2020, and this trend is expected to continue.
- Impact: FSI firms are incorporating ESG criteria into investment decisions and risk assessments. This not only reflects changing societal values but also addresses long-term financial risks.
6. Cybersecurity Challenges:
- Fact: Cybersecurity threats in the FSI sector are increasing in scale and sophistication. In 2020, there was a 485% increase in cyberattacks against the FSI.
- Impact: FSI firms must invest heavily in cybersecurity to protect sensitive customer data and maintain trust. Cybersecurity has become a critical component of risk management.
7. Remote Work and Digital Transformation:
- Fact: The COVID-19 pandemic accelerated remote work and digital transformation initiatives in the FSI. In 2020, 84% of FSI executives reported that they had expanded remote work capabilities.
- Impact: While remote work offers flexibility, it also presents cybersecurity and compliance challenges. It has also driven the need for more robust digital infrastructure.
8. Financial Inclusion:
- Fact: Financial inclusion efforts are expanding globally. According to the World Bank, in 2017, 69% of adults worldwide had an account with a financial institution or mobile money service, up from 51% in 2011.
- Impact: Initiatives like mobile banking and digital wallets are bringing financial services to underserved populations, driving economic growth and reducing poverty.
The FSI transformation landscape is dynamic and multifaceted, with opportunities and challenges intertwined. Adapting to these changes requires a strategic focus on innovation, customer-centricity, and regulatory compliance. As the industry continues to evolve, FSI firms that embrace transformation will be better positioned to thrive in the digital age.
ambition and aspiration to be client centric, be growth driven and find opportunities to improve returns for their stakeholders.
The Role of Product Owners in FSI
Product owners, in the context of the financial services industry, play a pivotal role in shaping the customer experience. They are the architects of innovative solutions, the custodians of customer-centricity, and the driving force behind product development. Yet, all too often, these critical roles are under-resourced, under-skilled, and under-recognized.
Product owners are responsible for:
- Innovation: They identify market opportunities, create product roadmaps, and ensure that offerings are aligned with customer needs and market trends.
- Customer-Centricity: They champion the voice of the customer, ensuring that products and services are designed with the end-user in mind.
- Efficiency: They streamline processes, reduce waste, and optimize resource allocation, driving cost efficiencies.
- Competitive Advantage: They differentiate their organizations by delivering unique value propositions that resonate with customers.
xtends to companies with more than 250 employees and either assets exceeding €20 million or revenue exceeding €40 million.
Alarming Statistics: The Eye-Opening VinciWorks Survey
A recent survey by VinciWorks provides a reality check on organizational preparedness for the CSRD. Astonishingly, only half of those surveyed were even aware that their business fell under the new CSRD mandate. Furthermore, a mere 23% have initiated preparations, with another 29% planning to start in the next six months. These numbers reveal a pressing issue: the majority of businesses are not prepared for the approaching compliance deadline.
Challenges Ahead: The Data Dilemma
One of the most daunting challenges companies face in adhering to the new directive is data collection, particularly concerning Scope 3 emissions and value chain impacts. Half of the respondents admitted facing substantial difficulties in gathering adequate data from their supply chains, a crucial requirement for comprehensive sustainability reporting.
The Brexit Angle
For British businesses thinking Brexit exempts them, think again. Given the close trading relationships and intertwined supply chains, British firms exporting to the EU will also need to meet CSRD requirements.
Conclusion: Time to Act is Now
With the clock ticking toward the implementation date, there is no room for procrastination. For businesses struggling to navigate the complex landscape of sustainability reporting, targeted management consulting can be a lifeline.
At Massivue, we offer specialized Sustainability Consulting services that help you dissect the complexities of directives like the CSRD. We not only help you understand your compliance needs but also assist in creating robust reporting mechanisms, focusing on data integrity and supply chain analytics. In this ever-changing regulatory environment, our services equip you to not just comply but to lead in sustainability initiatives.
So as the deadline for the CSRD looms closer, don’t let compliance gaps hold you back. Choose proactive preparation over reactive scrambling. Reach out to us today and take the first step toward seamless CSRD compliance.