Over the last twelve months, many financial services companies had to rapidly accelerate their digital transformation efforts in order to respond to the ongoing pandemic and its radical impact on consumer behaviors and expectations.
Bill Borden, Corporate Vice President, Worldwide Financial Services at Microsoft, thinks the industry as a whole did quite well given the situation. “We saw three years of transformation happening in three months,” he explains. “It was pretty incredible when you think about the processes, the technologies, and the decisions that were made for organizations to make these changes.”
Now, many financial institutions are looking at how 2020’s major shift in consumer trends will affect their business moving forward – and what that means for their business strategies and their transformation journeys. Borden sees a lot of companies looking for ways to take costs out of their business so they can better invest in new products, experiences, and business models in ways that drives speed, agility, and scale. “That very much takes you down the path of thinking about how much do you build on your own, how much do you rent, and how much do you buy,” he says. “[This] certainly puts more emphasis and focus on the use of fintechs in terms of partnering.”
Blurring definitions in financial services
When thinking about fintech transformation, Borden notes there has been a number of waves of transformation activity in the space. “[First, we] had the individual fintechs get incubated and grow up. Then [the] existing financial services institutions and the mature players, acting on their own, built new transformative digital processes, products, and services to actually compete with the fintechs,” he explains. “Now you have this third wave of institutions…actually thinking about the embedding of financial services in their business models.”
It is a value proposition that aligns well with Microsoft, given the company can offer fintech solutions built on its platforms and help cultivate partners that bring unique value to the marketplace. But while the definition of financial services companies might be blurring, Borden emphasizes that his focus is always on enabling his clients to be the best they can be given the investments they want to make and their desired time horizons.
Fostering fintech innovation
Microsoft has long had a strong focus on fintech innovation and partnering. The company has put a lot of time, attention, and capital into developing the fintech community, keeping a pulse on the innovation in fintech, and working to find the next set of fintech leaders. It does this in a number of ways, including through its venture capital arm M12 and through its community of fintech and other alliance partners, like KPMG, leveraging Microsoft technologies. “We curate that set of relationships from start to maturity as part of our strategy,” Bordon explains. “Many of the company’s mature fintech partners have gone on to serve the immediate needs of Microsoft’s clients in the marketplace. It’s a win-win for all involved.”
We curate that set of relationships from start to maturity as part of our strategy. Many of the company’s mature fintech partners have gone on to serve the immediate needs of Microsoft’s clients in the marketplace. It’s a win-win for all involved.
Building the foundation for transformation
When tackling innovation with financial services clients, Borden begins not by discussing technology, but by building an understanding of the company’s approach, purpose, and culture, in addition to key aspects of their operations – like how they manage risk and combat financial crimes, and what core systems and capabilities could be modernized in order to take costs out and create opportunities for reinvestment. Borden also works to understand the client’s customer expectations and experience, along with the client’s competitive nature and the insights they need to make competitive decisions.
With that knowledge in hand, Borden can then focus discussions on how data and AI can be used to support those decisions. “[And the] foundation for data and AI that has to be invested in over time if you’re going to be a transformative organization that’s driven by data that gives you the insights and personalization that customers are looking for,” he adds.
Getting excited about the possibilities
Looking forward, Borden is incredibly excited about the work that Microsoft is doing with a broad range of financial institutions that are looking to change the game in financial services. “We’re working with a European insurer where they have best of breed processing technology for their core underwriting systems,” he offers as one example. “We’re helping them build that in a way that they can leverage it and offer that into other ecosystems in the market.”
Borden’s also excited about the ecosystem partnerships Microsoft is involved in, including X15 Ventures: a partnership between Microsoft, KPMG, and the Commonwealth Bank of Australia focused on investing in new fintech organizations that can drive new solutions in the market.