Digital disruption is battering everything from retailing, high street banking to taxi hailing and while professional services have appeared resistant to digital transformation, that too is about to change
A recent competition run by legal Artificial Intelligence platform LawGeex, in consultation with law professors from Stanford University, Duke University School of Law and University of Southern California, pitted 20 experienced human lawyers against an AI system trained to evaluate legal contracts. They all read a series of non-disclosure agreements with deliberate loopholes included. The results showed the humans achieved an accuracy rate of 85 per cent and the AI 95 per cent. The humans took an average of 92 minutes to complete the task, the AI 26 seconds.
More recently, AI proved better and faster than eight retinal specialists from Moorfields Eye Hospital in London at diagnosing signs of major eye diseases, such as glaucoma or diabetic retinopathy, when tested against 997 patient scans.
Our own work in wealth management indicates that private banks that have thrived on traditional skills and brand heritage in the past, are constrained by dated business models and legacy technologies.
Agile Fintechs and Silicon Valley giants are already cherry-picking high value services and reshaping the professional services playing field. The same is true in investment banking and legal services, where the low cost of accurate AI due diligence is just the tip of the iceberg.
There are some overarching trends that are set to disrupt the established order. Let’s look at the key trends that are forcing radical changes to business models, client management and service offerings.
Generational change in lifestyle and attitude
Over the next five years millennials will increasingly become the ruling generation. They come with a very different set of attitudes and expectations to their baby boomer parents, demanding better value and faster results.
Baby boomers may be loyal and accepting of personal service, millennials are less convinced. This next generation will determine the future of professional services for many years to come, and rightly so. Given the technology we now have at our finger tips, why should an annual financial audit take four months to complete and involve so many highly educated, highly paid accountants to look through the books?
Regulatory environment – new frontiers
The regulatory environment too has changed, driven by a need for transparency and much greater compliance with complex new regulations.
This has created huge additional overheads for wealth managers in particular, increasing costs and reducing margins, however this is now part of the new reality which can be addressed with digital transformation
Which brings us to technology
As we move from legacy platforms and processes to robo-advisers, AI and next generation digital transaction platforms, there are new opportunities for professional advisors to get closer to their clients with more meaningful data to back up decisions.
The question is, how should the professional services eco-system react to these multiple threats?
From the outset, it is vital to recognise the transformational forces at play and the brand’s critical role in communicating change. Ultimately brand plays a much more significant role in digital transformation than you might think:
First, good branding is about defining and articulating Purpose – the reason an organisation exists. Every vision and mission must align with this, so, in a real-time connected world, if your purpose is not defined and articulated with clarity, how can you expect to achieve your strategic goals?
Second, a disciplined branding methodology engages and motivates leadership teams in a rigorous process that is highly valuable during periods of transformational change.
Third, since today’s disruptors are applying award-winning creativity and user experience design to bring their challenger brands to life, incumbents must also up their game and deliver world-class digital services to meet current and future demands.
Recognising the need for transformational change
Upping their game is what led Crédit Agricole Private Banking Services’ (CAPBS) to re-invent and re-position their brand.
Having identified that all private banks and wealth managers face similar digital transformation challenges the leadership team decided to re-frame their own digital offering as an independent provider of core banking technology and Business Process Outsourcing (BPO) services.
Their aim was to offer their best-of-breed, end-to-end private banking platform, S2i, as a fully managed service, either as software as a service (SaaS) or as a Business Process Outsourcing (BPO) solution. In so doing they could liberate their clients to focus on customising differentiating products and personalising front-end user experiences.
However, in order to be recognised as a transformation partner for global wealth managers, the business had to first undertake its own transformation.
This led to the creation of the new name, Azqore, which was announced in July 2018, with ‘Az’ referring to the end-to-end service offering and ‘qore’ referencing the S2i core banking platform. A fresh new brand look accompanied the name change, communicating the new proposition with confidence and clarity.
There is no doubt that the professional services sector is facing unprecedented disruption, but most industries are experiencing similar challenges.
This should not spell the demise of those traditional organisations who have relied for years on their heritage brands. Instead this should be seen as a once in a generation opportunity for re-invention.
About the Author
Peter Matthews is founder and CEO of Nucleus. Nucleus helps clients shape successful futures for their brands, by combining strategy, design, digital and IP to create value. Not only do we create and capture value for our consulting clients, we also practise what we preach: combining our brand, technology and intellectual property know-how in unconventional risk-reward relationships; or backing our ideas by launching our own ventures.