Having survived successive waves of technology-fueled disruption, financial services firms are now adapting to change driven by digital transformation. In this episode of the EIU Digital Economy podcast, Greg Baxter, chief digital officer at U.S. insurer MetLife, and Tejal Mody, head of business development for Rabobank’s wholesale banking division, share their views on where technology is leading the financial sector.

Tech disrupts financial services: A never-ending story

Financial institutions have long embraced technology and automation to manage costs and improve services, but today’s pace of change is much faster. And from Greg Baxter’s point of view, that acceleration is driven by three factors.

First, customers have far greater choice, and there’s a real shift of power from corporations to consumers. “There’s a saying that your last best experience anywhere is your next expected experience everywhere,” Baxter says. “So companies need to lift up to that level. And it’s as true in insurance as in any other industry.”

The second trend is the growth of analytics that enable institutions to understand events at a much deeper level. This will enable insurers to shift from indemnification of losses to prevention and recovery.

The third major trend is the emergence of new business models and changing industry dynamics. “Traditionally, companies have created value in vertical products,” Baxter says. “That value is now being created in horizontal customers’ journeys and in horizontal platforms.”

Tejal Mody says the growing value of data and its recognition as a strategic asset is enabling financial institutions to not only drive their business but to develop innovative new products for clients.

“Rabobank is the preeminent bank [for] the food and agribusiness sector,” Mody says. “When we think about financing agriculture, there are a lot of interesting applications that we’re seeing take hold with respect to data on the farm, whether it’s through an internet of things and sensors or just much better predictive ability around yield.”

Mody’s observation underscores another important shift. At one time, “stability” was the key word in financial circles. Now, it’s important for an institution to spur innovation and mobilize people around a compelling vision.

“I see my role far more as a change agent working in partnership across the organization to find those exemplary projects that start to create belief among the early adopters, and then start to bring other people along with that,” Baxter says.

Mody believes the key to finding those new applications and spurring innovation is to maintain an outward-looking focus. “We need to be exposed and almost probably collide with interesting things that are going on, so that we can then develop a sense of how we need to react,” he says.

Evolving technologies will continue to create new opportunities. From data analytics and artificial intelligence, to drones and telematics, new technologies will help insurers quantify the risks in the real world automatically and accurately.

Mody sees blockchain as another technology poised for explosive development. “Trade and commodities finance is a substantial business for Rabobank,” he says. “It is a very complicated business with multiple actors and points of verification across steps. Blockchain offers a very interesting platform that could completely transform how this business is conducted.”

Where these and other technologies are heading is difficult to say, but Baxter believes one thing is clear. “If you want to serve customers, you need to understand the broader environment and the context in which they collectively and individually operate,” he says. “That forces companies to ask, why do people buy or need your product, and what is the outcome that they want.”

Mody sees a similar shift to outcome-focused thinking — one in which technology helps make us more, well, human.

“I think [the future] is very much is around how we cement relationships, and I think our clients will expect more of that,” Mody says. “With technology, we potentially could become more human and more empathetic and more understanding of each other. And I think that’s the future.”


Read a full transcript of the podcast here.