Artificial intelligence, blockchain, cloud deployment models, fintech, insurtech, regtech, robotic process automation, big data analytics, channel diversification, changing customer expectations, and an ever more detailed regulatory environment are all part of a growing list of dynamic forces transforming financial services. Each of these has the power to be disruptive on its own; combined, they guarantee change for financial services providers of all types. But these forces are not exclusive to banks and financial institutions. IT services and traditional business process outsourcing (BPO) providers are increasingly focusing on their own technology capabilities as a means of avoiding disintermediation and gaining share in a competitive field. These companies know they need to adapt or die, and as a result are aiming to help banks with their broader digital transformation strategies.
A key illustration of this shift is the growing functionality and sophistication of AI, chatbots, and voice-driven interfaces. These technologies have the potential to automate many business processes, from customer service to back-office functions, such as HR and IT support, that previously would have been undertaken by human agents. Many of these individuals would have been provided on a BPO basis, such as call centers offered by third-party providers. Rather than acquiesce to these new technologies, though, IT services firms such as Hexaware are developing chatbot and AI capabilities that can be deployed in conjunction with traditional human agents, and they offer a hybrid pricing model to match these capabilities. This suggests a more streamlined approach to transformation that could prove less disruptive than the rip-and-replace models of the past.
BPO and IT services providers also face pressure from the growing range of tech startups and microservices that continue to expand and offer a growing range of easily integrated application programming interface (API)-driven services. As a result of the this, the growth of Platform-as-a-Service (PaaS) capabilities continues to remain high. For financial services providers, the use and deployment of these platforms has largely been relegated to back-office functions, but this is shifting as banks become more open to cloud-driven services in business-critical areas, including compliance and payments.
This focus on digital transformation was on display recently at Tech Mahindra’s TechMnx Futurise event, where the Indian IT services provider highlighted its multipronged approach to driving end-to-end services, including through recent strategic acquisitions of The Bio Agency and Target, expanding its capabilities into customer experience and financial services, respectively. Tech Mahindra is also developing its New Age Delivery Platform, aimed at providing microservices to clients, and is creating a platform for fintech integration into financial services enterprise infrastructure.
As capabilities in the IT services and BPO space continue to develop, it’s essential that banks and financial institutions keep an open mind on their choice of partners and look closely at how these players can help them meet their broader technology goals. While technology is critical, so is service delivery, and the market is quickly adapting to fill the gaps in existing transformation strategies.