A new industrial revolution fueled by data and artificial intelligence is rapidly changing the global economy and the world we live in. That’s according to Dave Dowsett, Invesco’s head of strategy, research and development who spoke at Invesco’s Leadership Exchange in Atlanta earlier this year.
Companies across all economic sectors and in every country are under pressure to innovate and embrace change at an exponential rate — those who can’t adapt are at the greatest risk.
The proof is in the numbers, Dowsett says: the average company lifespan has dropped from approximately 67 years in the 1920s to approximately 15 years today.
“The speed of companies coming and going has advanced. Organizations must understand where the competition is coming from – that is fundamental,” he says.
Financial services companies especially need to find a way to navigate disruptive technology particularly as artificial intelligence and machine learning creates new ways of doing business and engaging with customers. Doing so, however, remains a challenge for large organizations accustomed to moving slowly and avoiding risk.
To reduce the risk of missing out on the tech revolution underway, Dowsett says companies should follow these 5 suggestions for survival
2. Understand the impact of machine learning
Artificial intelligence and machine learning can remove bias in decision-making and lead to faster and more accurate results – for financial services companies, this is a huge opportunity.Fintech, and the firms that offer machine learning solutions to companies, are rapidly changing how financial services are structured, provisioned, and consumed.From agriculture, to transportation, to healthcare, AI and machine learning are changing the landscape. Financial services companies must stay on top of fintech and the opportunity and threat it represents.
2. Expand your ecosystem
Fintech companies are quickly changing how consumers interact with financial services, but they’re also startups that lack a focus on enterprise-wide challenges.“Fintech startups find a gap on the value chain and they relentlessly go after it,” says Dowsett. “They aren’t trying to go after enterprise problems. They’re going to go after a specific solution, like payments.”Therein lies a natural fit for large organizations to partner with startups and to tap into how they think and solve problems. “The competitive advantage will not be determined by the organization alone but by the strength of the partners and ecosystems you choose,” he explains.
According to an Accenture survey, 75% of executives agree that their competitive advantage won’t be determined alone but through collaboration.Says Dowsett: “You have to collaborate now to compete, you can’t just go away, think you’ll build a five-year initiative, build some code behind closed doors and then come out and be the best.”
Collaboration is key. This could be achieved by shifting away from traditional workplaces and into shared spaces that foster collaboration, like labs and campuses that identify synergies by putting startups next to enterprise organizations.
4. Embrace failure
“When you want to deal with disruption, you’ve got to think big. And that’s generally quite hard for financial companies,” says Dowsett adding that large financial services organizations tend to play it safe and “increment” their way forward.But in fintech, he says, big bets are critical – and they generally fail. “You’ve got to be prepared for that failure and have support when you do fail because if you don’t, people don’t want to do that again.”
5. Change happens from the top
Dealing with disruption requires top down sponsorship says Dowsett.“You can’t bring in a consultant to innovate for you. You have to do it yourself. You have to find where your gaps are,” he says.Dowsett recommends leaders ask people in their organization to identify where the problems lie. “You might need help on delivery but you don’t need help with consultants identifying your problems.”
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