APRIL 2018CIOAPPLICATIONSEUROPE.COM8Significant advances in technology are also driving change, including improvements in cloud computing, processing power, identity management, robotics, artificial intelligence (AI), machine learning, natural language processing, wearables, virtual reality, and augmented reality. Powered by specialised machines through Application Programming Interfaces(APIs), these advances have led to progress in areas such as product design, customer experience, mobile application development, data science, and cognitive computing. Smarter and better-interconnected machines are automating and improving lives across several dimensions. Wealth management (robo advice), transportation (self-driving cars), fitness (wearables), and assisting those with disabilities (adaptive and assistive technologies) are but a few examples.Strategies to HarnessExperts in finance are very good at what they do, having developed a deep understanding of their customers, the financial markets, and the regulatory environment. But finance often suffers from institutionalised "curse of knowledge" and "status quo" biases. The industry as a whole is notorious for being slow to adapt. It also tends to lack the right mix of skills and mindsets that would he financial services industry has been on a collective digital transformation for years. While grappling with disruption from FinTech companies, the industry is seeking out ways to reduce costs, increase efficiency, and connect with customers. The latest FinTech movement is at the forefront of a significant cultural shift led by digital natives. These FinTech companies continue to introduce new and innovative solutions to old problems providing customers with significantly more value than current financial services are offering. Three forces have contributed to this new intersection of finance and technology: maturing information economics, evolving platform business models, and continued advances in technology.The Technology Forces Impacting FinanceIn their book, Machine Platform Crowd, Andrew McAfee and Erik Brynjolfsson explain the significance of being able to make perfect digital copies at scale with almost zero cost. These are the new information economics. Look no further than music distribution for an ideal case study. In finance, the Nakamoto Blockchain and the subsequent growth of cryptocurrencies provide a more relevant example. Blockchain technology has the potential to reduce costs and improve efficiency in several areas including asset management, payment processing, and contract governance. Platforms facilitate the interaction between two or more market segments ­ often producers and consumers ­ leading to greater value potential and new data monetisation opportunities through network effects. Amazon, Alibaba, Uber, Facebook, YouTube, and WeChat are examples of platform businesses. FinTech platforms such as Credit Karma, Square, Stripe, CircleUp, and Prosper are actively challenging the financial services status quo. Creating genuine learning opportunities, putting in place feedback loops, adopting a "fail safe and fast" mentality, and instilling a sense that improvement is continuous, are great ways to develop new skills and shift mindsetsTTOD MCKENNA, COO, PRUDENTIAL PORTFOLIO MANAGEMENT GROUPSTRATEGIES TO HARNESS THE TECHNOLOGY FORCES IMPACTING FINANCEIN MYOPINION
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