5 key tech priorities for fintech leaders in 2022

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5 key tech priorities for fintech leaders in 2022

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This content is contributed or sourced from third parties but has been subject to Finextra editorial review.

Technology in modern financial services can be a complex subject. This is what business leaders should focus on to build a winning tech strategy.

Issues caused by sub-optimal tech choices are commonplace in the industry, leading to companies failing under unexpected stress or being unable to adapt in time when their business requirements change.

While no two projects are the same, we’ve observed some common themes for using scalable futureproof technologies to build diverse fintech systems. Taking advantage of these learnings sets financial service providers up to have reliable, secure, futureproof systems, providing a solid foundation for long term success.

We explore this and more further in our new white paper ‘Fintech Trends for 2022’ that you can download here.

1. Leaders need a greater overall understanding of emerging technology

We don’t mean getting as granular as in knowing how to code, but you do need a sufficient amount of knowledge to engage with your tech colleagues productively. With the pace of change accelerating, more is being asked of tech teams beyond just keeping the lights on, and this demands investment from business leaders into learning where the opportunities for innovation exist.

For those in doubt, being at the forefront of innovative technologies has shown to be incredibly important to the success of the tech giants disrupting financial services in the Chinese market. Machine learning (ML) and artificial intelligence (AI), for instance, can help firms to better mitigate risk, combat fraud, personalise customer experiences and, crucially, analyse massive blocks of data to make truly informed decisions.

While other developments such as blockchain and digital currencies are still nascent, they do make up a large part of what some are calling web3 — or the next chapter in the internet economy — which is set to be far more decentralised in nature. We recently co-organised a panel debate as part of Fintech Week London on blockchain’s potential in financial services, which gave plenty of food for thought on where things are heading.

2. Software engineering should be at the core of business strategy

Business and IT borders are blurring — business is the technology, and technology is the business. Software engineering is key to creating value and the best performing traditional banks now focus more of their tech spend on growth and innovation rather than on maintenance.

With a centuries-old monopoly over the financial industry now eroded for incumbents, similar to what happened in telecoms, significant disruption is being driven by technological advances. Although it is difficult to predict the future models of finance, they are sure to be created by the world’s brightest software engineers.

3. Customer-centricity is the driving force of change in the industry

The rapid digitisation of the last two years was ultimately in response to changes in customer behaviour during the pandemic. Customer-centricity has been a winning strategy for fintech

firms for some time, and any traditional firms who were not yet on board have now joined the party, even if a little late.

Bill Gates said in 1994, “banking is necessary, banks are not,” and the rise of embedded finance (such as buy-now-pay-later), which is all about providing a better customer experience, is evidence of this being true to at least some extent. Whether it is AI personalisation, blockchain powered digital onboarding or something else not yet imagined, at the end of the day, technology is a means to an end and being customer focused is the theme that underpins everything that has longevity. The goal is to deliver value to customers, and the tech used to do it is secondary.

4. A clear strategy for modernisation of legacy infrastructure is essential

Financial services incumbents have multiple core legacy systems written in different programming languages which are complex, fragmented and pre-date the digital era. Years of integrating new services, mergers and acquisitions have led to IT architecture that is expensive to run and maintain, but also tricky to change.

The stress placed on systems caused by spikes in online commerce since the pandemic has shown that the short-term superficial additions and fixes made were in many cases not implemented with long-term resilience and scalability in mind. While banks experiencing IT system failure is a regular occurrence, the potential damage from a reputational and trust perspective is now more severe than ever.

5. System security, fault tolerance and resilience are more important than ever

Trust in financial services institutions are extremely important to society as a whole, especially in the wake of the 2008 financial crisis. When banking and fintech systems are suboptimal from a security and operational resilience perspective, the risks to customer trust are substantial and potentially fatal if things go wrong. Top of what keeps CIOs and CTOs awake at night is the threat of potential cyber attacks.

In modern financial services, fast delivery of new digital products and services must be balanced against the security and reliability of the system. If you have designed your system with resiliency in mind, you can avoid any trade-off. Software with built-in resilience can give you the foundation to be agile and nimble while simultaneously maintaining system security.

And don’t forget the human bit

Fintech firms and incumbents use technologies like cloud, blockchain, AI and ML, but there is often a lack of skilled employees that truly understand how to leverage them effectively. According to the World Economic Forum, more than half (54%) of all employees will require significant reskilling in 2022. Cultivating a technology literate workforce with an engineering mindset has never been of such value in organisations as it is today, but the reality is finding and onboarding experienced fintech software developers can be extraordinarily difficult for CTOs. This is where partnering with an extended team to work on your architecture and backend services while your in-house team does the frontend and UI/UX can help you develop and launch products quicker than the competition.

For a deeper dive into these fintech themes and how they should inform your tech strategy and decision making, download our free whitepaper “Fintech Trends for 2022” here.

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Contributed

This content is contributed or sourced from third parties but has been subject to Finextra editorial review.