Financial services companies investing in latest technology can reduce costs and gain more flexibility, says expert

Out-Law News | 08 Aug 2014 | 3:28 pm | 1 min. read

Banks, insurance companies and other financial services companies can lower their IT costs and gain greater flexibility from investing in new technology, an expert has said.

Specialist in technology law in the financial services sector John Salmon of Pinsent Masons, the law firm behind Out-Law.com, said there is a lot of evidence in the financial services market of businesses increasing their investment in technology.

"We see a great opportunity for traditional players in the financial services market to embrace technology," Salmon said. "New technology is facilitating new products, new interactions with customers and allowing businesses to enter into new markets. Already we have seen a significant number of financial services businesses procuring the latest data analytics software, implementing new mobile payment applications and, in the retail investment market specifically, using technology to guide consumers through the process of investing in financial products."

"Suppliers are increasingly offering commoditised solutions that can be integrated into businesses' existing IT infrastructure and this technology is giving financial services companies a chance to streamline existing business processes, revise outdated business models, and use the latest technology to cut costs and operate much more flexibly," he said.

Salmon was commenting after a report by UK Trade and Investment (UKTI), which helps businesses increase their exports and drives investment into the UK, highlighted the current scale and the potential of the UK's financial services technology market (17-page / 4.69MB PDF).

According to the report, the estimated value of the existing UK markets for payments, platforms, software and data and analytics is £20 billion. The biggest of those four markets is payments, which accounts for approximately half of that total. UKTI said there are likely to be particular growth opportunities in the UK payments market.

"It is widely expected that the online sector will continue to grow, with a change in operating models, further emergence of new market entrants (especially aggregators), and increasing usage of big data, leading to a shift in the composition of the revenues generated by value-added services," the UKTI's report said.

The UKTI also outlined the potential for software suppliers to increase their business in the financial services sector.

"The back and middle offices of financial services organisations often have systems that are patchy, and in need of an upgrade to fit with the digital, connected world," the report said. "The large volume of activity undertaken by banks means that there is a major opportunity to provide sleeker, more efficient and more innovative software to the financial services industry, which has underspent on its system development since the financial crisis."

Data analytics providers also have an opportunity to help financial services companies "improve consumer experience, manage risk and improve monitoring of business activities", the report said. It identified the use of 'telematics' data in the insurance industry as one existing example of how data is being put to better use in the financial services sector.